In 1935 Sinclair Lewis wrote It Can’t Happen Here, a book warning that European-style fascism could easily take root in the United States. His central character is a right-wing multi-millionaire populist, Buzz Windrip, who is elected US president on a platform of restoring American prosperity and greatness and promptly installs a coercive dictatorship. The parallels with Donald Trump’s victorious presidential campaign are all too clear.
Yet Trump’s election victory also reflects the failed politics of the Democratic Party. And there lies a warning for the United Kingdom too. All the signs suggest that without a transformational progressive politics the extreme right could also take control in Britain.
Plato was among the first to assert that democracy could thrive only if there was modest inequality and widespread public education based on morality and respect for truth. Neither condition exists today. We live in a globalising economic system best described as rentier capitalism, in which an institutional architecture has been constructed such that more and more income flows to the owners of physical, financial and so-called intellectual property.
In the past four decades, wealth has grown relative to income and wealth inequality vastly exceeds income inequality, while the labour share of income has fallen globally. The paradox of this process is that the ideological domination of free market economics has created the most unfree market system imaginable, with market power concentrated in ever fewer hands.
Rentier capitalism has also generated a new global class structure in which the top three classes in income terms are recipients of rental income. These are a plutocracy, an elite serving the interests of the plutocracy, and a shrinking salariat in secure employment that benefits from owning various forms of property.
Below them is the old proletariat—long the core support for US Democrats, Labour in Britain and social democrats generally. But the proletariat has shrunk sharply, with many falling into a new mass class: the precariat. This class is characterised by insecure, unstable labour; volatile earnings without non-wage benefits or guaranteed state benefits; and, most importantly, distinctive relations to the state. The precariat is the first mass class in history to systematically lose acquired rights of citizenship, notably through loss of benefit entitlements now dependent on satisfying means and behaviour tests. They are, and feel like, supplicants. This is stigmatising, humiliating and induces the four As: anxiety, alienation, anomie and anger.
In 2011, I wrote The Precariat: The New Dangerous Class, which argued that unless governments addressed the needs, insecurities and aspirations of the precariat there would be a drift to fascism. In 2016, after Trump was first elected US president, numerous people emailed me to say the “political monster” I warned of had arrived.
The precariat has continued to grow but consists of three factions in what is still a class in the making, not yet a united class-for-itself with a common vision. The first is the Atavists, those falling out of old working-class communities, who may have limited formal education. They feel they have lost Yesterday, and lean towards support for Trump and his lookalikes elsewhere. They are predominantly men. The term “left behind” is not right. They have been pushed down. They are often anti-feminist, racist and anti-liberal.
The second faction is the Nostalgics, the millions who feel they have no home anywhere, or no Present. These are the migrants and minorities, including many people with disabilities. In general they do not support populist politicians, but some are drawn to appeals to traditional conservative views through the weaponising of religion—a favourite tactic of Trump and his type.
The third faction is the Progressives. These are mainly the young educated who were promised a future and a career if they went to college. They come out realising they have bought a lottery ticket and will not have future income security. They are aghast at the neofascism of Trump and his ilk, but see little in what the orthodox “left” is offering. They are inclined to disengage from politics, not voting at all.
When after Trump’s victory the Vermont senator Bernie Sanders accused the Democrats of abandoning working-class people, the Democratic Party chair Jaime Harrison responded that Joe Biden had been the most pro-working class president because he had saved union pensions, joined a picket line and created millions of high-wage jobs.
Both Sanders and Harrison were stuck in the past. Biden had looked after the proletariat, but ignored the precariat, who are not in trade unions with access to pensions, paid holidays and access to social rights. They suffer chronic insecurity, and are denied access to universal benefits and entitlements. The Democrats’ neglect began in 1996 with Bill Clinton’s welfare reform, which shifted social policy decisively to means-testing and behaviour-testing, backed by punitive sanctions. New Labour and European social democrats of the Third Way took the same route. In the UK, it culminated in the odious Universal Credit.
While Democrats were alienating the precariat, a space opened for libertarian populists. Ironically, because Donald Trump is a serial liar, he and his copyists can sell a vision of a better future while the plutocracy he represents and on which he depends for financial support will deliver libertarian policies contrary to the material interests of the precariat.
He was funded by the world’s richest man, Elon Musk, who reportedly donated $175m to the campaign. The day after Trump’s victory, the nine richest American plutocrats gained an extra $64bn, according to Bloomberg’s Billionaire Index. There were also unseemly celebrations on Wall Street, with traders wearing Trump T-shirts. As one said, “Every capitalist in America is celebrating.” Meanwhile, there were reports that millions of Americans would be losing medical insurance under Trump.
In her Mais Lecture earlier this year, Rachel Reeves claimed that Labour would emulate Bidenomics, which she named “securonomics”, or “modern supply-side economics”. Yet “securonomics” appears to be aimed at providing security not for ordinary people, still less the precariat, but for wealthy investors and corporations. In her initial budget in October she certainly began on this course.
Many of the measures Labour has introduced are seriously regressive—retaining the two-child benefit cap, cutting the winter fuel allowance, raising national insurance for business (a cost passed onto workers through lower wages, and expanding the precariat), cutting the real value of benefits for people with disabilities, and raising university tuition fees. In her Mais Lecture Reeves said that Labour would adhere to a fiscal rule with a “target to ensure that expenditure on welfare is contained within a predetermined cap”—a clear signal that benefits that would give security to the precariat and others are set to fall.
A key idea behind securonomics is that public spending will shift from current to capital investment intended to boost economic growth in the longer term. It brings to mind Keynes’ famous aphorism – “in the long run we are all dead”. For this, Labour is relying on attracting foreign financial capital to achieve growth, organising a lavish business summit a few months after taking power. Its Biden-inspired industrial strategy promises even more subsidies for capital, reducing its risk exposure in the hope that this will boost GDP growth. If those subsidies go mainly to foreign capital there will be massive leakages abroad, mainly to financial firms in the US.
Even the IMF has recognised that structural inequalities of wealth and income are the main impediments to economic growth. But there was no plan to reduce inequalities in the Mais Lecture. Instead, Labour is to rely on supply-side reforms that will probably increase inequalities, while having little effect on investment and growth. Before the election, Labour had said it would tax private equity profits—so-called “carry” or “carried interest”—at the same rate as income tax. But in her budget, Reeves blinked, announcing the lofty incomes of those taking private equity profits will be taxed at 32 per cent, compared with 45 per cent that other high-income earners are supposed to pay.
However, the biggest flaw of all is the almost religious faith placed in higher GDP growth to raise living standards all round. Under rentier capitalism income gushes upwards, little trickles down. One revealing study found that with increased GDP growth, only the top two percentiles—i.e., top 20 per cent—gain more than the rate of growth; lower down the spectrum many do not gain at all. In other words, growth increases inequality.
There is also no demand-side vision. Where is the increased demand coming from? The precariat’s income will remain depressed and uncertain. There is nothing to suggest private debt—which is crushing demand and increasing stress, mental illness, deaths of despair and anomic violence—will fall. And real wages will continue their decades-long stagnation. If growth happens, it will not make the precariat more secure or reduce the inequality that breeds resentment and social conflict.
The space for a plutocratic populism is opened up by a combination of a visionless centre-left party and the erasure of a civilised centre-right party. Trump achieved the latter by openly attacking the Republican establishment. In Britain, we have a visionless Labour government and crushed civilised Conservatism, as the Tories lurch to the right to wrestle with Trump admirer Nigel Farage’s Reform Party.
In short, unless Labour changes course, giving priority to providing basic security and a vision of a future for the precariat, what has happened in the US could happen here.
