This is the third in my Modern Philosophy series. Robert recommended that I write a piece on the future of capitalism. But I’ve wanted to write a blog on how Epicureans should think about the modern economy generally, so here it is. I’ve also been asked to write about what my contemporaries at university think on various issues, so look out for that next week. 

The modern capitalist system must be understood as the third age of economic globalisation. The first age took place during the Industrial Revolution, where the nations of Europe used their insurmountable comparative advantage to dominate the global economy. Sometimes this would be achieved by formal colonisation- the imposition of European governance in the extra-European world. But there was informal colonisation; the dominance of European commerce globally, often without the consent of the colonised- China being the quintessential example. The second wave was during the mid-20th century, where two world wars and the Great Depression forced the developed world to rebuild its domestic markets. This was an austere but much more equitable time than the preceding age. Particularly after WW2, GDP growth was steady, and its benefits were evenly distributed. For social democrats, this was the ‘Golden Age of Capitalism’, at least for the developed world.

But in 1973, the global oil crisis shook the world economy. The mixed economy that depended on both private enterprise and government investment began to falter. Particularly in Britain and the United States, there was a demand for economic liberalisation. Under Thatcher and Reagan respectively, formerly publicly owned services were privatised, taxes and non-defence government spending were reduced, and many regulations were scrapped. At the same time, the Bretton Woods Institutions (World Bank, IMF, WTO) grew in policy depth. The European Single Market became more comprehensive. There was an emphasis on reducing barriers to trade and commerce, which became known in America as the Washington Consensus. This model of economic policy is called neoclassical economics- neoclassical because it reaffirms the commitment to free trade established by classical economists like Adam Smith and David Ricardo, while allowing governments to intervene in a crisis, such as the bank bailouts in 2008. Post 1973, the renewed aggressive trend towards global economic integration is what principally characterises the third age of globalisation.

The result of the third age has been what economists describe as an ‘elephant curve’ in improving fortunes for the world population. At the very left of the curve, the world’s extreme poor have been left behind. There are still billions of people who lack the basic necessities of life. They live in squalid conditions, often lack access to good food, drinkable water, decent healthcare, and are the most vulnerable to climate change. To make matters worse, they overwhelmingly live in illiberal democracies or authoritarian regimes, and so lack the means to enact democratic change. To varying degrees, they face discrimination on the basis of social class, ethnicity, gender, religion and age. The now vast wealth of the global economy makes it a moral disgrace that there are still so many people that live in inhumane conditions.

The good news is that most people are no longer living in extreme poverty. The third age of globalisation has seen a rapid reduction in the global poverty rate, even when adjusted for inflation. Increasingly uninhibited by trade barriers, and fuelled by investment from the developed world, the economies of the developing world are growing rapidly. At the same time, improvements in science and technology mean that the world’s average person now enjoys luxuries that the wealthiest person a century ago would only have dreamed of. What were formally agrarian economies, are now increasingly industrial, helped by corporations outsourcing jobs from the developed world and the rapid increase in global consumer demand. For the bulk of the world’s population- the non-extreme poor living in the developing world- globalisation as we now know it has been a runaway success.

The effects of the third age on the developed world has been very mixed and largely dependent on the country in question. But there are two commonalities that apply to all developed countries. The first is that the very richest have become much richer. In Britain and the United States, this is largely due to financial deregulation. But for the most part, the increasing wealth of the super-rich is because in a globalised economy, the potential profits are much greater because there is a larger market for goods and services. At the same time, developed countries have generally reduced corporation taxes and the highest bracket of income tax, because globalisation makes capital and labour more mobile; the rich can move away from unfavourable tax environments very easily.

The second, and more significant commonality, is that rapid deindustrialisation and the economically liberal policies pursued by politicians in the developed world, has led to incomes for the average rich-world citizen grow very slowly, if not stagnate. The replacement of now-unprofitable manufacturing jobs with unskilled service sector jobs has fuelled popular discontent, leading to the rise of populists like Donald Trump and Marine Le Pen. Both are disproportionately favoured in the rural, post-industrial parts of their respective countries, where people feel as if the political establishment has betrayed them by embracing globalisation. At the same time, freedom of commerce has been accompanied by freedom of labour mobility- the result has been a rapid increase in people migrating from the developing to the developed world in search of a better life. This migratory trend is viewed negatively in the post-industrial developed world: the newcomers are seem as competitors for jobs, culturally alien, and a threat to the close-knit communities that often characterise working-class life.

Overall, on a global scale, the free market is a force for good. It increases competition, drives up quality while driving down prices. It has increased the choice of consumer goods for the vast majority of the world’s population. Although there is still a lot of progress to be made, fundamentally changing the world’s economic model would put the rapid increase in global economic growth at risk. What international institutions need to focus on is making this growth environmentally sustainable in the era of global warming. The transition to renewable energy will not be costless, but it will also be the next great opportunity, should we choose to seize it.

It is the free-market policies enacted on a national level that are the greatest cause for concern, especially in the developed world. The developing world should pursue a moderate form of free market capitalism, where entrepreneurship and wealth-creation are encouraged, while the government makes strategic investments to improve productivity and environmental sustainability. These countries don’t yet have the resources to create a European-style welfare state. But in developed countries, the government ought to intervene further. The recent rise in popular discontent should be an impetus for rapid change. Governments need to develop clear strategies to deal with the challenges of deindustrialisation and more recently, automation. Communities left behind by globalisation should not be ignored on the basis that economic fortunes are improving for the nation as a whole. There needs to be more investment in retraining programmes, as well as infrastructure investments to boost non-professional employment and overall productivity. Having said that, there also has to be an honest recognition of the side-effects of globalisation. The income and wealth equality of the second age, desirable as it may be in theory, is not coming back anytime soon- and anyone who promises to restore it is either lying or a fool. It should also be acknowledged that should governments choose to pursue a more interventionist policy programme, as on balance I think they should, there will be losers. Of course, the super rich will be poorer due to higher taxes. But particularly in Britain and the United States, where the size of the upper-middle class is big, many moderately well-off people will also be worse off. It isn’t sustainable to fund the necessary investments described above by borrowing, particularly given global economic uncertainty and the possibility of interest rates rising. The upper-middle class may have benefited from free-market capitalism, but they have done so at the expense of their country’s overall wellbeing. This can be seen most clearly in Britain, where south-west London, Surrey and Buckinghamshire have a higher disposable income than almost the entirety of the rest of Europe, but productivity in most of the UK’s major cities lags behind its European competitors. In order for the latter to benefit, the former (which includes myself) must sadly pay.

Be warned, this is probably going to be quite a long post. My apologies in advance. I’ll try to be as concise as I can. But seeing as I’m British, I have a lot of strong opinions on this subject- opinions which I’ve largely refrained from expressing until now. Next week the Modern Philosophy series will resume, but I’m sure this won’t be the last of my posts on British politics. 

Last Thursday, the UK held elections for country councils across the country. The Conservatives made tremendous gains, particularly in previously-considered Labour heartlands such as the West Midlands metropolis and much of Scotland. Labour continued its steady decline- the party now controls only one rural county in England. The Liberal Democrats, who tried to appeal to Remain voters disillusioned by the Conservatives’ apparent preference for a ‘Hard Brexit’, won a healthy 18% of the popular vote. But given the nature of their support’s geographical distribution, this resulted in them actually losing seats. In England, the area where the Liberal vote increased the most was the South East; this surge in popularity was almost entirely fruitless given how popular the Conservatives are there. The only positive result was that the right-wing populist party, UKIP, was decimated, winning only one seat, having previously held 115.

However, even UKIP’s demise was a cause for concern. Nigel Farage, the party’s former leader, has repeatedly praised Theresa May for advocating policies he has long campaigned for: a considerable reduction in immigration, a more distanced and adversarial relationship with the EU, the repeal of the Human Rights Act, and a tough ‘law and order’ stance on crime. UKIP’s supported collapsed mainly because the Conservative Party had assimilated so many of its views into their own programme, thus rendering UKIP purposeless. A similar phenomenon happened in the most recent Israeli election, where Netanyahu’s Likud Party gained Knesset seats at the expense of the Orthodox and pro-West Bank settlement parties, because he combined their policies with the effectiveness of voting for a party big enough to lead any centre-right coalition. In the same way as supporters of the Jewish Home and Shas were told to ‘come home’ to Likud, UKIP voters were made to feel at home in May’s Conservative Party, which hopes to use the upcoming election to ditch the more liberal aspects of Cameron’s ideology and legacy.

The similarities with Israel continue in regard’s to Britain’s Left. Like in Israel, the British Left is hopelessly divided. The Labour Party, like most European social democratic parties, faces the prospect of long term decline due to forces beyond its control: the decline of traditional unionist industry and the working class, the rise of a middle class who mostly work in the non-unionised service sector, an ageing population ( older voters tend to prefer the centre-right because they are more socially conservative and resistant to rapid social and cultural change), an increasing immigrant population and accompanying probable native backlash, and the rise of a wealthy global elite who use their sheer economic clout to advocate for less generous social insurance programmes. Having said all that, the structural challenges Labour faces do not excuse it from performing as badly as they have. Jeremy Corbyn, the party’s leader, is unpopular with voters because of his uncompromisingly old-school brand of Leftism; he has advocated policies like bringing back coal mining and choosing not to kill terrorists if given a clear opportunity. The party is horribly divided between its socialist, soft-left and centrist wings, and does not try hard enough to minimise those divisions. There is very little message consistency and discipline. Most significantly, Labour has not made its position on Brexit clear and coherent, in an attempt not to offend both Leave and Remain voters. This has alienated both. The Conservatives are the party that wants to get on with Brexit, the Liberal Democrats would like to stop it if possible. Labour is stuck in policy no-man’s land.

Labour also faces the problem of left-wing nationalism, which is far more prominent in the UK than in most of Europe because of its multi-national nature. The country is economically, politically, demographically and socially dominated by England, which often breeds resentment amongst the Welsh, Scottish and Northern Irish. In the local elections, Plaid Cymru (the Welsh Nationalists) and the SNP ( Scottish National Party) gained seats. Both parties have social democratic economic outlooks, but juxtapose themselves with Labour through their opposition to unionism. Given that separatist nationalism is an almost exclusively left wing phenomenon in the UK, the nationalist parties end up splitting the left wing vote, enabling the unabashedly unionist Conservative Party to govern with a larger plurality of the vote. Finally, there’s the Green Party, which gained only 21 council seats, but can often mean the difference between a Labour and a Conservative MP in the swing seats.

Its important to note that an increasingly belligerent tone isn’t the only reason for the Conservatives’ popularity. Theresa May has a popular personal brand- she is seen as a no-nonsense politician who simply wants to get on with Brexit, and needs the support of the people in order to secure a good deal. This is an absurd view- Parliament has already given May a mandate to negotiate with the EU, and can do nothing to influence the nature of her negotiating stance. What the election is really about is domestic affairs. May wants to move the Conservatives to the left on economic issues, having had personal doubts about the austerity programme of Cameron and Osborne. This has helped appeal to former Labour and UKIP voters, both of whom are far less inclined to support the free market than the Conservative base. A larger majority in the Commons would help May ignore the economic liberals in her party, thus diminishing the raison d’etre of the left wing parties.

Given the all-but-inevitable Conservative landslide in the General Election a month today, it is hard to recommend how Epicurean Brits ought to vote. Ideally Britain would have its own Emmanuel Macron and En Marche- an unapologetically socially liberal, pro-globalisation, pro EU and pro immigration movement, which would support a comprehensive but unburdensome welfare state and a non-interventionist foreign policy. Most importantly, this movement would have a reasonable chance of attaining power, just as Macron has done. For the most part, the Liberal Democrats are the closest Britain has to such a phenomenon. But the party is still very much divided between its social democrats and the more economically liberal ‘Orange Bookers.’ It is unclear whether the party would reduce the deficit with a view to paying off the debt, or increase the deficit to fund public services. It has no realistic chance of gaining power on its own, and has refused to work in coalition. Its leader, Tim Farron, has said some questionable things, like alluding to an ambiguous stance on the morality of homosexuality, and supporting Trump’s bombing of Syria.

I would love to endorse Labour for this election. I voted for them in 2015, because I was opposed to the EU referendum- which was clearly a way of solving an intractable division within the Conservative Party, and I thought it inappropriate to subject such a complex and multifaceted issue to a plebiscite, thus robbing the electorate of the expertise and relative sovereignty of Parliament. I also believed that the lethargic nature of the economy at the time needed a fiscal stimulus to boost growth and employment, even if it meant a larger deficit. I judged the austerity measures imposed during the earlier half of the Coalition government to be callous and regressive, even if the severity of which was later diminished.

None of these issues apply now. Instead, the Labour Party looks incapable of governing the country. Its unbridgeable divisions would prevent much from getting done. It isn’t clear what its approach to Brexit is; but for me, anything less than an unambiguous commitment to the Single Market is unacceptable. And though I remain highly sceptical of large corporations and free-market fundamentalism, Labour currently goes too far in the other direction. It would increase spending in virtually every area, while refusing to raise taxes on 95% of the population. This would mean either a vastly increased deficit, punitive taxation on the relatively wealthy, or a combination of the two. Given that unemployment is lower than it was at the last election, the effects of a fiscal stimulus would be inflationary- driving up the cost of living for those Labour purports to represent. Raising taxes on the rich (which I support to an extent) to that degree, would increase tax avoidance, raise prices for the bottom 95% by increasing business costs, and possibly entice some to move overseas.

Overall, I cannot recommend anyone wholeheartedly. I would still vote, though I wouldn’t hold it against you if you were so put off by the current state of affairs that you decided to stay at home. As of yet, I haven’t decided what to do, though that may change, and I’ll write a post if it does. I’m so appalled by the pettiness of our politicians, the narrow scope of public debate (the exclusion of foreign policy and climate change from popular discourse is sickening), the arrogance of our media and commercial elites, the increasing bigotry and casual xenophobia, the disregard for facts and intellectuals,  and the sidelining of the youth. The British polity is consumed by nostalgia, unrealistic expectations, ignorance and parochialism.  The Right is as unhinged as ever; The Telegraph- the newspaper of choice for ‘respectable’ conservatives- has recently featured op-eds in support of Trump, Marine Le Pen, and climate change denial. The Left is divided and incoherent. Were Epicurus a present-day Brit, he would have been just as averse to political participation as he was in Ancient Greece.