Corbyn’s appropriation of traditionally neoliberal promises on tax has exposed contradictions in Tory economic policy. Here’s how he could further shed light on an economic system that is not delivering for the many.
One of the best moves of the Corbyn campaign was having a tax policy that could be summed up as 95% of people not paying more tax. Rather late in the game, John McDonnell also announced that a Labour government would cut VAT – effectively making Labour a party of tax cuts for the majority. In such a light, Labour’s most left-wing leadership in decades was offering a promise normally made by right-wing parties.
The neoliberal discourse of low taxes has often masked a reality of the tax system becoming more regressive, with tax rises for the poorest.
Labour’s capacity to intrude on such classically neoliberal promises lies in the contradictions between neoliberalism as discourse and “actually-existing neoliberalism”. With tax, the neoliberal discourse of low taxes has often masked a reality of the tax system becoming more regressive, with tax rises for the poorest. For instance, under Thatcher, income tax rates were slashed, but VAT was doubled. Under the austerity coalition, the tax base saw shifts away from progressive and business taxation, to regressive taxation. Labour exposed this contradiction, allowing them to make the same promises as neoliberal parties have done while offering a wildly different vision of society.
This approach can be extended into other areas, exposing more of the contradictions of neoliberalism. Most notably, Labour could seek to capture the ideas of “choice”, “enterprise” and “competition”. These are central ideas of neoliberalism, which has relied heavily upon a narrative of a “free” or “open” market where consumer prices are driven down, and where there is relentless innovation, because of endless competition between a range of new and old, big and small, entrepreneurial and established companies.
Instead of more competition, we have larger corporations which can strangle upstart competitors in their infancy.
The reality of the situation, however, is much different. Instead of more competition, we have larger corporations. Instead of a market dominated by disruption caused by the cut and thrust of small and large businesses innovating and seeking greater market share, we have oligopolies on top of oligopolies. For instance, the top four supermarkets in the UK account for 70% of the market. Within the supermarkets, “choice” is equally between a few companies – although often with a variety of brands representing them. With baby food, four companies have a 95% market share. With chocolate, three companies control two thirds of the market. With beer, in the country with more breweries per capita than any other in the world, 70% of the retail market is held by four companies. With such high degrees of market control, and the vast financial firepower that comes with market control, these companies can strangle upstart competitors in their infancy.
Tackling oligopoly – particularly through the threat, or use, of anti-trust measures – would not only align Labour with some of the most dominant politico-economic ideas of the last four decades, but it would also help with many goals for a more equitable society. This is because tackling corporate dominance would have many predistributive effects. For example, with less money in the hands of major corporations, there is less scope for the vast avoidance of tax that major corporations currently engage in. Equally, dividend payouts on corporate shares (with the minor exception of pension funds, who now only own around 3% of UK shares) not only upwardly distribute money, they also move money out of the country – with 54% of UK stock owned now owned by economic actors based overseas (compared with under 30% in 1997).
Labour could make a coherent argument that being on the side of business and being on the side of big business are two very different things.
The tactical political benefits of such a move are many. Labour could make a coherent argument that being on the side of business and being on the side of big business are two very different things. That innovation and entrepreneurialism can be supported through limiting the big players and thereby creating the space needed for new upstart companies to emerge – that competition is a continual process that must be guarded, rather than something that has already run its course. They could also draw upon the language and examples of the US when, in the name of capitalism, the government fought the “robber barons”.
The more successful Labour is at advancing alternative visions of choice, enterprise, and competition the more it will cast the Conservatives – and others who espouse dominant politico-economic discourses – not as defenders of free markets, but of tax-shirking corporations. The more successful it is, the more it can speak to small business owners and to the economic aspirations of many who would otherwise be turned off by Labour’s offering.
Narrow economic orthodoxy has a ripe, fetid stink to it, and its decay is most obvious to those who suffer economically under it.
The biggest benefit, however, is to start to change dominant visions of the economy and alter understandings of how the system has been transformed over the last forty years. The narrow economic orthodoxy – which has painted regressive taxation as low taxation, which has recast an ideological commitment to a smaller state as necessary fiscal prudence, and which has cast oligopoly as competition – has a ripe, fetid stink to it, and its decay is most obvious to those who suffer economically under it. Corporate dominance is easy to see when people are looking for it, and people will look for corporate dominance if a compelling narrative of how the economy is rigged against them is advanced.
Labour have already started to steal the Conservatives’ clothes with their policies on taxation, but a promise to fight corporate dominance would truly leave the Conservatives exposed and flapping in the wind. Moreover, highlighting the contradictions between neoliberalism as discourse and actually-existing neoliberalism could help move us beyond an economic system that is increasingly failing to deliver.
