The British Crisis and the ‘End of Neoliberalism’

By Pia Riggirozzi and Jean Grugel. Pia Riggirozzi is Senior Lecturer in Global Politics at University of Southampton (@PRiggirozziAcademia.edu) and Jean Grugel is Professor of International Development at University of Sheffield. You can find more posts by Pia here.


There are many useful lessons to be learnt from the Latin American debate about ‘post-neoliberal’ political economy.

The crisis in British politics, from the slow, partial and uneven economic recovery to the exhaustion of the Westminster model in the wake of the Scottish referendum, is in the news. Academic commentary following the financial crisis in 2007-8 has focused on political disaffection, anti-politics and the disintegration of apparently established political allegiances and the emergence of new protest parties.  But, in order to understand fully the crisis in British politics, we need to put it into a global context.  Observers of British politics would benefit from looking outwards, and reflecting on experiences elsewhere.

Tony Payne’s recent SPERI blog sets out an argument that traditional patterns of governance in Britain are collapsing due to a combination of citizen frustration with an insulated and arrogant ruling elite and insensitive political leadership and, more profoundly, a political-economic project that not only fails most families but seems to be cutting away, wilfully and needlessly, at the welfare system and social contract that have hitherto guaranteed social peace in Britain.

Payne asks why it is so difficult for British leaders to manage the structural changes reshaping Britain and wonders whether we are in the midst of a political economy that could, as he boldly puts it, lead to ‘the unravelling of neoliberalism’: the Right is failing to impose an economic model based on rising inequality and the Left unable or unwilling to refashion a social contract of ‘caring capitalism’ or ‘capitalism with a human face’.

We agree with Tony Payne that the British political debate urgently needs to go beyond narrow discussion of partisan politics and short-term election strategies to embrace a more profound engagement with political economy.  But, as already indicated, we also suggest that there is much to be learned about the British crisis by putting it in the context of what has happened elsewhere or, put differently, by looking at it through the lens of a genuinely global political economic analysis.  What this might reveal are interesting and unexpected points of comparison with the politics and the economics of middle-income countries in the global South, where demands for better management of neoliberalism and calls for a ‘more intelligent state’, as the late President of Argentina, Nestor Kirchner, put it, are the stuff of everyday political debate.

One place to start would be the rich debate in and on Latin America about whether a ‘post-neoliberal’ political economy is possible.  The political-economic crisis in Latin America in the early 2000s led to calls for an end to neoliberal rollback, a new social contract negotiated and managed by a more active state, and the construction of a social consensus that was both respectful of economic growth and sensitive to urgent need to address the poverty legacy, invest in education and create welfare.  As we have ourselves shown, so-called ‘post-neoliberal experiments’ have combined a pragmatic attempt to refocus the direction and the purpose of the economy through state spending, increased taxation and management of exports with a project of enhancing citizenship through a new politics of cultural recognition in Bolivia and Ecuador and attempts to recreate the state-sponsored pact between business and labour in Argentina and Brazil.

Of course, post-neoliberal governance in Latin America is not problem-free.  Inadequate state capacity, the scale of inequality, personalist political leadership and a worrying lack of institutionalisation of reform – plus the threat of external discipline from creditors – all undermine some of the early gains achieved by new left governments.  But, despite their problems, and in the face of often profound criticism from international organisations, ‘post-neoliberal’ governments have proved remarkably durable at the polls, as the recent re-elections of Dilma Rousseff in Brazil and Evo Morales in Bolivia and the support for the re-election of Tabaré Vázquez in Uruguay show.

What’s more, these governments draw support not only from the rural and urban poor but also from the middle classes.  Indeed, the key to understanding calls for an end to a governance model subject entirely to the uncertainties of the global economy in Latin America has been the impact of unregulated markets on private and public sector middle-income groups.  Put simply, the absence of a proper social pact able to balance private profitability with welfare and public investments in the 1980s and 1990s led to immiseration of the middle classes, most dramatically in Argentina where the ‘new poor’ were the motor of the 2001 protest movement and factory take-overs.

There is surely much to reflect on here for analysts of the current crisis in Britain and indeed in Europe more widely.  Despite the difficulties so many people face simply in getting by, set out clearly in the recent Resolution Foundation’s recent report on Low Pay, the political parties in Britain seem unable to take their concerns and needs seriously enough.  One of the lessons from Latin America is that political leaders need to fashion an alternative to neoliberalism as part of their offer to the electorate if they want to win.

So, to go back to Payne’s question: are we in a situation of electoral rebellion, crisis and rising inequality on a scale that could lead to the unravelling of neoliberalism in Britain?  Despite the evident problems, we are sceptical as to whether the current crisis is really the prelude to collapse. Markets are deeply embedded as mechanisms of implementation (even in universities, schools and hospitals); and there are scapegoats that are, worryingly, being forced to carry the blame – immigrants most notably.  British citizens may not yet be ready to turn fully on their political leaders.  In Latin America, the challenge to neoliberalism came from electorates that refused to accept parties committed to free markets but did so in the context of a global political economy that gave Latin American citizens some hope for the future.  Whilst Latin America is part of the ‘rising rest’, Britain, however, is struggling with relative decline.

These important similarities and differences help put the British crisis in context.  Our key point is that the debate Tony Payne has opened about the future of neoliberalism is to be welcomed and we call now for genuinely comparative and global consideration of what ‘post-neoliberal’ political economies might look like, in Britain and elsewhere, and what might be needed to bring them into existence.

Past UK welfare cuts and austerity led to rising crime. Will we count the same costs this time?

Cross-posted at the LSE Politics & Policy Blog

The Thatcher governments are widely accepted to have influenced many areas of modern life in Britain. Stephen Farrall and Will Jennings explore the link between Thatcherite macroeconomic policies and crime, arguing that if the ever-growing evidence base of the economy-crime link is true, political decisions about austerity cannot be separated from their consequences in the domain of law and order.

Was one of the unanticipated side-effects of social and economic changes associated with the adoption of neoliberal and monetarist economics during the 1970s/1980s rising crime rates?

In a recent study, we explored the relationship between the economy and property crime in England and Wales, focusing on those aspects of macroeconomics and the distribution of wealth which were associated with adoption of neoliberal and monetarist policies first under the Callaghan government, as a condition of the IMF loan, and prominently under the Thatcher governments. Our findings suggest that changes in the unemployment rate are an important factor in explaining change in property crime rates. They also demonstrate that the link between the economy and crime changed in the period from the 1960s to the mid-2000s, with the effect of the unemployment rate on crime becoming stronger over time.

Using time series analysis we develop a model of the effect of changes in socio-economic variables (unemployment, inequality, welfare spending and incarceration) on the national rate of property crime. We find that while increases in unemployment led to increases in the property crime rate (dampened by effects of welfare spending and incarceration), there is no evidence that rising income inequality was linked to the rising crime rate.

The radical agendas of the Thatcher governments between 1979 and 1990 are widely accepted to have had a great influence on many areas of modern life in Britain – both at the time and in the period since Thatcher left office. Such influence has been identified in housing, education policies, social security and, of course, the economy. In particular, macroeconomic policies were associated – at least in the short-term – with rising unemployment and economic inequalities.

Studies of the economy-crime link suggest higher rates of offending are associated with higher levels of unemployment and economic inequality. Both these conditions are consistent with the broad trends observed in Britain during the 1970s and 1980s, leading us to explore whether one of the unanticipated side-effects of neoliberal and monetarist economics during the period was growth in crime. Our study is based on time series analysis of the per capita rate of recorded property crime in England and Wales and the effects of changes in unemployment, income inequality and the rate of incarceration. (For further technical details of the data and modelling, see the paper here).

As has been observed in studies conducted in other countries, we find a significant relationship between the national rate of unemployment and official recorded crime; a one-point increase in the rate of unemployment is associated with an increase of two crimes per thousand head of population (for a population of around 50 million people this would constitute an increase of around 100,000 property crimes). More interestingly, we discover that this effect has strengthened over time – indicating there has been a hardening of the economic underpinnings of offending. Whether or not this trend will be sustained or reversed in the future remains to be seen .The unavoidable conclusion, then, is that the growing effect of unemployment during the 1970s and 1980s coincided with the monetarist revolution and sharp increases in the unemployment rate in Britain (as well as in other countries such as the US). While monetarist policies succeeded in bringing inflation under control, subsequent upturns in unemployment were associated with rising crime and a strengthening link between economic conditions and offending. Meanwhile, the rising level of crime gave rise to rightward shifts in criminal and policing policies.

The steady growth of crime throughout the 1980s reached alarming rates between 1991 and 1995, forcing the Conservative governments of the time to address the issue of crime ‘head-on’ during the early-1990s. In light of this, we argue the criminal justice policies of the Major and Blair governments were a lagged response to rising crime, and the economic policies that had underpinned this trend (in particular, the political view of unemployment as an acceptable price for getting inflation under control). During this later period, the Labour opposition provided little resistance to the punitive criminal justice policies under Major’s Conservative government, narrowing the range of policies that were ‘imaginable’ for all political parties.

As a consequence, the unanticipated legacies of the social and economic policies of Thatcherism might be seen as:

  1. The foregrounding of crime as a political issue.
  2. The creation of a series of social and economic circumstances (in particular mass unemployment, the geographical concentration of the socially and economically disadvantaged through implementation of housing policies and growth of inequalities coupled with real term reductions in social benefits) which were conducive to the production of crime at the aggregate level.
  3. The strengthening of the effect of unemployment on the national rate of property crime.
  4. Widespread dominance of an issue definition of the problem of crime which flowed from the new social and economic circumstances. This emphasised punitive policies and social control in place of the social welfare model adopted by successive governments since 1945.

In this sense, the outcomes of macroeconomic policies can spill-over into seemingly unrelated domains, such as crime. Political choices of targets for economic growth, public spending and inflation as well as decisions about the tolerable (or politically “acceptable”) level of unemployment and income inequality contribute to patterns of offending, and subsequent calls for crack downs. If the ever-growing evidence base of the economy-crime link is true (and holds amidst the social and economic distress of the post-crisis era), political decisions about austerity cannot be separated from their behaviour consequences in the domain of law and order.

Stephen Farrall, Will Jennings, Colin Hay, and Emily Gray are currently working on an ESRC-funded project on ‘Long-term Trajectories of Crime in the UK’.