Owen Jones is wrong. The idea we live in a world dominated by ‘neoliberalism’ is laughable
By Ryan Bourne
The removal of price and income controls, and the reduction of trade union power, have done little to combat a long-term trend over the past century of greater government control in the UK, writes Ryan Bourne for CapX. Government spending is greater than it was during the post-war consensus. The caricatured view of British governance is far from the neoliberal ideal.
- The idea we live in a world dominated by ‘neoliberalism’ is laughable
- In terms of spending, government is as big as it ever was
- The combined number of pages of acts and statutory instruments has increased by a factor of 20
When one starts debating the size and scope of government in the UK, often figures on the left and right speak past each other. Owen Jones’ recent book The Establishment suggested that, overwhelmingly, a commitment to neoliberalism is the ideology that dominates our elites and politics. According to him, the last three decades have seen an unprecedented experiment in a radical slashing of state spending, an erosion of the welfare state, privatisation, outsourcing and deregulation.
Yet, at the very same time the libertarian journalist and thinker Martin Durkin has described the elites of the UK as the “vast, tax-eating, paternalist, public sector “New Class””, running a “bloated public sector”, drunk on spending and with a desire to regulate everything in sight. How can two intelligent people reach such starkly different conclusions?
Jones is certainly right that in the period since the 1980s global trade has become freer and capital more mobile, while we removed controls on prices and incomes, privatised the old nationalised industries, reduced the power of trade unions and allowed resources to flow freely into and out of the UK.
But in truth, these policy changes have largely been minor aberrations from a long-term trend over the past century of greater government control – of politicians and civil servants centralising power, and taking decisions away from individuals, families, civil society institutions and local government. In other words, the very opposite of classical liberalism or ‘neoliberalism’.
In terms of spending, government is as big as it ever was. Adjusting to government spending as a proportion of GDP at factor cost (to allow accurate long-term comparisons given changed tax regimes) shows it increased from around 10 per cent of GDP at the beginning of the 20th century to 47 per cent in 2014. Despite claims we live in a neoliberal age, this was higher than in any year between 1947 and 1979 – the supposed big-government post-war consensus.
The scope of government has grown massively in that time too. As A.J.P Taylor explained, most law abiding Englishmen in 1900 would only encounter the state through the Post Office or by passing a policeman on the street. Then, state expenditure on welfare, health and education was just 1.6 per cent of the UK’s national income. These services were overwhelmingly provided by civil society institutions, such as friendly societies. Now, expenditure on welfare, health and education make up 63.5 per cent of overall state expenditure – or 29 per cent of national income.