Burnham’s ‘neoliberalism’ critique is just Thatcher karaoke

The British economy today is a million miles away from “neoliberalism”, even if we lack a catchy name to describe what has replaced it, says Kristian Niemietz

For some countries, we have well-developed national stereotypes and associations. Everyone has an idea in their mind of what counts as “typically French”, “typically Italian” or “typically German”. These ideas may not be true, but they feel true, because they are familiar.

For other – usually smaller – countries, we lack well-defined stereotypes and associations. For those, we sometimes use a heuristic: we treat them as extensions of a larger neighbour we feel more familiar with. You will hear tourists in Portugal saying ‘Gracias’, but you will never hear a tourist in Spain accidentally use a Portuguese word. People mistake Dutch for German, but never German for Dutch. We generically refer to Asian takeaway restaurants as “Chinese”, even if they are run by people who have never been to China. And so on.

We sometimes do something quite similar for political eras and ideologies. The last time Britain had a government with an easily identifiable political ideology was in the 1980s. Everyone has some idea in their mind of what “Thatcherism” means. That idea may not be true, but it feels true, because it is familiar.

It is trickier to describe the political ideologies of the governments that came after Thatcher, and it gets steadily harder the further we move away from the Thatcher years. So some of us use the same heuristic as described above: we revert to the most recent period we think we can clearly ideologically define, and treat everything since then as just an extension of that. The Major years? Thatcherism, but with John Major. The New Labour years? Thatcherism, but with tax credits and more money for the NHS. The 2010-2024 Conservative-led governments? Thatcherism, but with austerity, Brexit and Covid. “Starmerism”? Probably also Thatcherism, somehow.

40 years of neoliberalism

Andy Burnham’s recent “40 years of neoliberalism” speech is the latest case in point. Burnham was, in fact, playing the whole fashionable buzzword bingo: deregulation, privatisation, austerity, financialisation, trickle-down economics… how do you do, fellow Novara Media kids?

On the substance, though, Burnham could not have been more wrong. The British economy today is a million miles away from “neoliberalism”, even if we lack a catchy name to describe what has replaced it. At the time of writing, one of the main news stories popping up on my feed is a government plan to strongarm supermarkets to adopt “voluntary” price caps on milk, bread and eggs. Another one is the victory of a Nimby campaign against a redevelopment plan for an old shopping centre in Peckham, southeast London, which would have delivered close to 900 new housing units in a mixed-use residential-commercial setting. This is not exactly John Cowperthwaite’s Hong Kong.

But it is not a Cuba-style socialist planned economy either. The reason why we still refer back to “Thatcherism” is that the Thatcher-era reforms have not been reversed, as such. It is not that British Airways, British Telecom (BT Group) or Rolls-Royce have been renationalised.

What we have instead is an economy where the means of production are notionally privately owned, but the state has a major say in what the notional owners are allowed to do with them. My colleague Christopher Snowdon has recently described this model as a “Capitalist Command Economy”. To give an example: when energy was a nationalised industry, the state prioritised coal at the expense of gas, in order to appease the National Union of Mineworkers. Today, the state forces notionally private energy companies to prioritise renewable energy over fossil fuels, in the name of the Net Zero cult. In both cases, politics trumps economics, and the state has the final say, whether the industry in question is in private or in public hands.

Some of Andy Burnham’s own comrades are a lot closer to the mark than he is in their characterisation of the British economy and its discontents. The Labour Growth Group published a manifesto last week in which they said:

“The state […] rations the factors of production and ordinary life. Energy, land, housing, infrastructure, skills, care and capital become scarce or expensive […]

Costs rise for households and productive firms.”

Quite so – and while they would never call it that, this is essentially a left-wing critique of the Capitalist Command Economy. It needlessly constrains the supply of some of the key input factors that a thriving economy needs, strangling growth and driving up consumer prices. There may well be a sensible centre-left answer to this, as the Labour Growth Group shows. But Burnham’s 1980s Karaoke will not get us there.