In an excerpt from the introduction to her new book, Late Soviet Britain: Why Materialist Utopias Fail, Associate Professor of Political Economy at LSE’s European Institute Abby Innes considers how factors including the rise of neoliberalism have destabilised Britain’s governing institutions.

Late Soviet Britain: Why Materialist Utopias Fail. Abby Innes. Cambridge University Press. 2023.

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Why has Great Britain, historically one of the strongest democracies in the world, become so unstable? What changed? This book demonstrates that a major part of the answer lies in the transformation of its state. It shows how Britain championed radical economic liberalisation only to weaken and ultimately break its own governing institutions. This history has direct parallels not just in the United States but across all the advanced capitalist economies that adopted neoliberal reforms. The shattering of the British state over the last forty years was driven by the idea that markets are always more efficient than the state: the private sector morally and functionally superior to the public sector. But as this book shows, this claim was ill-founded, based as it was on the most abstract materialist utopia of the twentieth century. The neoliberal revolution in Great Britain and Northern Ireland – the United Kingdom – has failed accordingly, and we are living with the systemic consequences of that failure.

Britain championed radical economic liberalisation only to weaken and ultimately break its own governing institutions.

The rise of nationalist populism in some of the world’s richest countries has brought forward many urgent analyses of contemporary capitalism. What this book offers, by contrast, is the explanation of a dark historical joke. It explores for the first time how the Leninist and neoliberal revolutions fail for many of the same reasons. Leninism and neoliberalism may have been utterly opposed in their political values, but when we grasp the kinship between their forms of economic argument and their practical strategies for government, we may better understand the causes of state failure in both systems, as well as their calamitous results.

Comparing the neoclassical and Soviet economic utopias, [w]hat emerges are mirror images – two visions of a perfectly efficient economy and an essentially stateless future.

Britain’s neoliberal policies have their roots in neoclassical economics, and Part I begins by comparing the neoclassical and Soviet economic utopias. What emerges are mirror images – two visions of a perfectly efficient economy and an essentially stateless future. These affinities are rooted in their common dependence on a machine model of the political economy and hence, by necessity, the shared adoption of a hyper-rational conception of human motivation: a perfect utilitarian rationality versus a perfect social rationality. As the later policy chapters demonstrate, these theoretical similarities produce real institutional effects: a clear institutional isomorphism between neoliberal systems of government and Soviet central planning.

When it comes to the mechanics of government, both systems justify a near identical methodology of quantification, forecasting, target setting and output-planning, albeit administrative and service output-planning in the neoliberal case and economy-wide outputs in the Soviet. Since the world in practice is dynamic and synergistic, however, it follows that the state’s increasing reliance on methods that presume rational calculation within an unvarying underlying universal order can only lead to a continuous misfit between governmental theory and reality. These techniques will tend to fail around any task characterised by uncertainty, intricacy, interdependence and evolution, which are precisely the qualities of most of the tasks uploaded to the modern democratic state.

In neoliberalism, the state has been more gradually stripped of its capacity for economic government

The Soviet and neoliberal conceptions of the political economy as a mechanism ruled by predetermined laws of economic behaviour were used to promote pure systems of economic coordination, be that by the state or the market. Leninism, as it evolved into Stalinist command planning, dictated the near-complete subordination of markets to the central plan. In neoliberalism, the state has been more gradually stripped of its capacity for economic government and, over time, for prudential, strategic action, as its offices, authority and revenues are subordinated to market-like mechanisms. Both Soviet and neoliberal political elites proved wildly over-optimistic about the integrity of their doctrines, even as they demonised the alternatives.

For all their political antipathy, what binds Leninists and neoliberals together is their shared fantasy of an infallible ‘governing science’ – of scientific management writ large. The result is that Britain has reproduced Soviet governmental failures, only now in capitalist form. When we understand the isomorphism between Soviet and neoliberal statecraft, we can see more clearly why their states share pathologies that span from administrative rigidity to rising costs, from rent-seeking enterprises to corporate state capture, from their flawed analytical monocultures to the demoralisation of the state’s personnel and, ultimately, a crisis in the legitimacy of the governing system itself. This time around, however, the crisis is of liberal democracy.

The book’s policy chapters in Part II explore how the neoliberal revolution has transformed the British state’s core functions in the political economy: in administration, welfare, tax and regulation and the management of future public risk.

After setting out the philosophical foundations of these ideologies, the book’s policy chapters in Part II explore how the neoliberal revolution has transformed the British state’s core functions in the political economy: in administration, welfare, tax and regulation and the management of future public risk. In Part III I examine the political consequences of these changes, and demonstrate how Britain’s exit from the European Union has played out as an institutionally fatal confrontation between economic libertarianism and reality. The final chapter considers how the neoliberal revolution, like its Leninist counterpart, has failed within the terms by which it was justified and instead induced a profound crisis not only of political and economic development but also of political culture.

Under ‘late’ neoliberalism we can see a similar moment of political hiatus, as neoliberal governments likewise resort to nationalism and the politics of cultural reaction to forestall public disillusionment and a shift in paradigm.

I use different periods of Soviet history as an analytical benchmark throughout the book, but the Brezhnev years (1964–1982) were those of the fullest systemic entropy: the period of ossification, self-dealing and directionless political churn. Under ‘late’ neoliberalism we can see a similar moment of political hiatus, as neoliberal governments likewise resort to nationalism and the politics of cultural reaction to forestall public disillusionment and a shift in paradigm. I use the United Kingdom as the case study because it was both a pioneer of these reforms and, in many respects, has gone furthest with them. If neoliberalism as a doctrine had been analytically well-founded, it was in the United Kingdom, with its comparatively long and strong liberal traditions, that we should have seen its most positive outcomes.

By the early 2020s the Conservative government of Boris Johnson had sought to criminalise peaceful protest, to constrain media independence and to insulate the political executive from parliamentary and public scrutiny.

To be clear, Britain’s neoliberals were never totalitarians of the Soviet variety. They never used revolutionary violence to create a one-party state, deployed ubiquitous intelligence agencies to enforce repression or used systems of mass incarceration and murder for political ends. Britain’s neoliberal consensus has nevertheless favoured a one-doctrine state, and the violent suppression of specific, typically economy-related, protests has been a periodic feature of its politics since 1979. Britain’s neoliberal governments have also developed an increasingly callous attitude to social hardship and suffering. Most troubling of all is that the more neoliberalism has been implemented, the more the country has been driven to the end of its democratic road. By the early 2020s the Conservative government of Boris Johnson had sought to criminalise peaceful protest, to constrain media independence and to insulate the political executive from parliamentary and public scrutiny. In short, it had abused its authority to disable legitimate political opposition. What I hope to explain is why any regime that commits itself to neoliberal economics must travel in this direction or abandon this ideology.

What follows is an argument about the collapse of the empiricist political centre and its replacement by utopian radicalism. Specifically, this is a story of how the pioneering and socially progressive philosophy of liberalism is being discredited by utopian economics and the practically clientelist methods of government that follow from it, just as the politics of social solidarity essential to a civilised world was undermined by the violence and corruption of the Soviet experiment. As the old Soviet joke had it, ‘Capitalism is the exploitation of man by man. Communism is its exact opposite.’ There are, of course, many challenges distinct to neoliberalism and I pay attention to them, but my purpose here is to see what we can learn about the political economy of the neoliberal state when we look at it through the lens of comparative materialist utopias.

Note: This excerpt from the introduction to Late Soviet Britain: Why Materialist Utopias Fail by Abby Innes is copyrighted to Cambridge University Press and the author, and is reproduced here with their permission.

This post gives the views of the author, and not the position of the LSE Review of Books blog, or of the London School of Economics and Political Science. The LSE RB blog may receive a small commission if you choose to make a purchase through the above Amazon affiliate link. This is entirely independent of the coverage of the book on LSE Review of Books.

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This is the morning when I know that almost anything I right now will be the equivalent of chip paper by lunchtime. Any speculation on what Jeremy Hunt might say today is, most particularly this year when so many things have been mooted as possibilities, particularly pointless. In that case, I will discuss a general point and not a specific forecast.

The only point on which all commentators appear to agree this morning is that the strongest possible hint has been provided that today’s autumn statement (or budget) will include details of tax cuts.

The one thing that I can say for certain is that the last thing that we need today is tax cuts.

A one per cent cut in the income tax rate would cost around £7 billion. The benefits would go to all taxpayers, whatever their income level. The greatest benefit will go to those with the highest levels of income because the higher the income that a person has, the bigger the gain that they get from a percentage fall in the tax rate. That is a simple arithmetic fact. So too is it a simple fact that those who do not pay tax cannot benefit from a tax rate cut. Their gain comes to precisely nothing.

A cut of one per cent in national insurance is even more discriminatory. The cost is approximately £5 billion per annum, with the difference between this cut and that for income tax being that pensioners are excluded.

Meanwhile, whilst everyone has gone quiet on the issue, I suspect that inheritance tax cuts will be mentioned today. They may well be one of the many NITMO offerings (‘not in my term of office’), meaning that they will have no impact until after the coming general election, but I think that they are likely to be proposed, nonetheless. The entire benefit will, of course, go to those already wealthy.

It is also widely rumoured that there will be a substantial change to corporation tax because the £9 billion per annum deduction made temporarily available last year to soften the blow of the increase in the rate to 25%, as a result of which large companies can offset their entire capital expenditure cost against their taxable profits in the year in which that capital expense is incurred will, it will be announced, continue into the future, making it another NITMO issue that will be used to taunt Labour. Since the incidence of corporation tax is almost entirely on shareholders (although there are economists who argue otherwise), this benefit will also flow to the already wealthy, who are always the biggest beneficiaries of lower tax rates paid by the companies that they own.

In other words, any tax cut today will be deeply selective, with a very strong bias towards those with higher incomes. Those most in need will lose out, entirely. Those on low incomes will gain a little, at best. If, in that case, this is the focus of the autumn statement, it will have three typically Tory consequences.

Firstly, it will deliberately benefit the best off.

Secondly, it will deliberately increase inequality in the UK.

Thirdly, it will deliberately increase the divisions in our society.

Meanwhile, the Tories will claim that such cuts will encourage enterprise, increase the amount of work that people are willing to do, and will, therefore, increase growth.

As I noted when being interviewed on Radio Five yesterday, in my entire career as a practising chartered accountant not one client told me that a cut in the tax rate would ever impact the amount of work that they were willing to do. Firstly, that was because very few knew what that rate was. Secondly, it was because those who were running their own businesses rarely knew precisely what their profits were until well after the time that they were earned. Thirdly, it was because, even if they knew what their income was, their ability to relate that directly to the amount of tax they might pay was decidedly limited because of the complexity of the tax system. In other words, whilst this link between tax paid and effort expended might look to be obvious on an economist's whiteboard when teaching students, in the real world and with small tax changes the impact is almost certainly non-existent.

So, if this is the focus of today, then what we will be looking at is a Tory tax giveaway to those most likely to vote for them in exchange, from which we will see no overall economic gain to the economy of any great significance, not least because those who will benefit most (the best of) are the most likely to save everything that they gain from a tax cut.

I can hope for better. I suspect my hope will be forlorn.

Australia has made its first climate agreement with a Pacific nation

Originally published on Global Voices

Australia's Prime Minister Anthony Albanese tweeted that the treaty “will safeguard Tuvalu’s future while respecting sovereignty.” Photo from the Twitter post Prime Minister Anthony Albanese

Australia and the south Pacific island nation of Tuvalu have signed a treaty that seeks to address the harsh impact of climate change. Both governments described it as a “beacon of hope” but some climate activists have dismissed it as a “defense treaty.”

The Australia-Tuvalu Falepili Union would allow at least 280 citizens of Tuvalu to either study or work in Australia each year. Fale pili is a Tuvali word that means “looking after your neighbor.”

Tuvalu, which has a population of 11,200, is a nation of low-lying atolls facing immense risk from rising sea water levels.

The treaty document states that “Australia shall arrange for a special human mobility pathway for citizens of Tuvalu to access Australia.” Australian Minister for Foreign Affairs Penny Wong adds:

‘Falepili’ reflects the duty of neighbours to care for, share with, and protect each other.

Respect is at the heart of the Falepili Union, and we will count on each other to support the aspirations and wellbeing of our peoples.

Tuvalu's Prime Minister Kausea Natano underscored that “it's not just a milestone but a giant leap forward in our joint mission to ensure regional stability, sustainability and prosperity.”

This will be Australia’s first climate-related agreement with a Pacific nation granting access to residents at risk from rising sea water levels. Prime Minister Anthony Albanese posted the following to X (formerly Twitter) after signing the treaty:

Australia and Tuvalu are family. And today we are elevating our relationship to a more integrated and comprehensive partnership.

Prime Minister Natano and I signed a treaty that will safeguard Tuvalu’s future while respecting sovereignty, to be known as the ‘Falepili Union’. pic.twitter.com/stYYMBPAc4

— Anthony Albanese (@AlboMP) November 10, 2023

However, environmental activists note that the treaty is silent on the issue of phasing out of fossil fuels. Tuvalu Climate Action Network urged Australia to make a more decisive commitment.

It is imperative that Australia acknowledges the urgency of the climate crisis and takes assertive measures to diminish its dependence on fossil fuels. Offering residence or citizenship rights to Tuvaluans, though a compassionate response, does not halt the inexorable rise in sea levels.

In a thread on X, activist Lavetanalagi Seru wrote that Australia should back its words with concrete action:

The disconnect between the familial language in agreements and Australia's climate policies is stark. As family, there's an expectation of support and shared responsibility. How can this be reconciled when climate policies fall short of global expectations?

It's crucial for Australia to bridge the gap between rhetoric and action on climate change. Pacific Island nations face real and imminent threats, and these agreements should reflect genuine commitment, not just symbolic gestures.

Researchers Taukiei Kitara and Carol Farbotko also wrote in an editorial that the treaty “does not deliver climate justice for Tuvaluan people.” They asked an important question in the piece:

What measures will the Australian government take to ensure that Tuvaluan migrants do not end up facing more hardship in Australia than they might have at home, such as homelessness?

They added that the treaty would potentially undermine Tuvalu’s sovereignty: “It sidesteps the important question of Australia’s commitment to phasing out fossil fuels and contains considerable rhetoric around respecting sovereignty, but quite clearly erodes Tuvalu’s sovereignty on issues of national security.”

The treaty allows Australia to access Tuvalu’s territory, and also grants it veto power over security arrangements and defense-related matters involving the small island nation.

Pacific correspondent Barbara Dreaver wrote that the treaty should be called “Australia Defence Treaty in Tuvalu.”

The Australia-Tuvalu Falepili Union dressed up as a bilateral treaty – meaning it works for both countries – should really have been called the Australia Defence Treaty in Tuvalu.

Because that’s exactly what it is.

She explains how this will affect governance in Tuvalu:

Australia has tied up Tuvalu on all things defence and security. Tuvalu cannot enter into any partnership or engage with anyone else without Australia’s approval.

This extends to infrastructure. Say a country like Japan offers Tuvalu aid to help build a wharf in one of the outer islands, Australia has to approve it.

3/ Article 4.3: “Tuvalu shall provide Australia rights to access, presence within, and overflight of Tuvalu’s territory, if the activities are necessary for the provision of assistance requested by Tuvalu under this agreement. ” pic.twitter.com/XvuEXq3hoz

— Dr Anna Powles (@AnnaPowles) November 10, 2023

The agreement is a milestone for the two countries, but Tuvalu will have an election next year, which means that it can still be questioned if a new government is elected.

Written by Mong Palatino

All P5 members, and indeed the whole world, suffer adverse consequences from the continuation of these wars. All are paying a price in terms of financial burdens, economic instability, risks of terrorism, and risks of a wider war. For the sake of global peace, let the Council now choose to end these wars. An edited Continue reading »