This is the Preface to Michael Roscoe’s book, From Brexit to Fixit
I started writing this book in the wake of those two voter-induced shocks of 2016: for Brexit in Britain and President Trump in the US. The fact that so many people – around half the electorate in both countries – wanted to break the established order and bring about changes that were far from guaranteed to improve their lives, indicated a widespread dissatisfaction with the way things were going. The dominant politico-economic model of the past few decades, a system based on liberal democracy backed by free-market capitalism (sometimes referred to as the ‘Anglo-Saxon model’, appropriately enough), had not been delivering the prosperity that these voters had come to expect.
I concentrate mainly on the British angle of the story, but the issues are remarkably similar in both countries: the loss of well-paid jobs for those without college degrees, especially in rural areas and the old industrial heartlands, caused by globalization and automation, the reduced power of labour unions and, to a lesser extent, the influx of immigrants who are prepared to work for lower pay; the associated feeling that living standards are falling and life generally is getting harder, at least for the poorer half of the population.
The culprits are considered to be the ‘liberal elite’, which in Britain’s case includes the meddling unelected ‘eurocrats’ of the European Union. This book is not about Brexit, as such (or Trump, for that matter); rather, it is about the economic processes that led to the disenchantment that in turn led to these votes for disruption and change, along with a more nationalistic attitude generally; the rise of populism, etc.
I’d written about these economic processes before. Stated briefly, they are as follows: the financialization and corresponding de-industrialization that began in the late 1970s and increased throughout the 80s and 90s, with deregulation of the banking sector and the associated globalization of finance, enabled by the revolution in computer technology, all of which in turn led to a massive increase in debt and inequality.
In my previous book I showed how GDP figures were increasingly being inflated by unproductive debt, giving a false impression of rising prosperity and leading to expectations that could not be satisfied by the nation’s underlying economic output. Much of the wealth creation that the figures implied was not actually taking place: productive industry was declining in Britain (and to a lesser extent in the US) while the rise of finance served only the rich.
Well, that book was published in 2014: a lot has happened since then. In particular, the Covid pandemic and the Russian invasion of Ukraine caused great disruption to the global economy, and Britain of course got Brexit. The pandemic and the war have added to the problems, but the underlying economic issues have not changed, because the system has not changed. The problems that led to Brexit and Trump have only got worse; prospects for the majority continue to fall.
What has gone wrong here? Why is Britain in decline? And what should we do about it?
The aim of this book is to answer those questions, but the gist of it is this: After decades of government policies that put finance before real industry, the UK is now suffering the consequences of underinvestment, low productivity, excessive inequality, an over-reliance on debt, a widening trade deficit and a growing dependence on imports for essential goods.
In the course of my research over the past decade or so I became aware of a defect at the heart of our economic system that explains why these problems keep getting worse: the way money is created in the modern economy actually promotes both debt and inequality, enabling the rich to get richer at the expense of the majority, while at the same time failing to direct investment to where it is most needed.
In the following chapters I explain how we can change our system to one that serves everyone, not just the rich, and why this will help us to build a viable, more equal society, one in which we can tackle the biggest threat of all by embarking on a ‘green new deal’ without the need for ever-rising public borrowing, and therefore without impoverishing future generations.
As we struggle to return to what we might still think of as the normal pattern of growth, we should accept that the old ways were failing anyway, and that a return to business-as-usual is neither viable nor desirable. We need to reassess our values and improve the foundations of our economy, so that, without piling up ever-more debt, we can start investing in projects that will give us a better chance of long-term, sustainable prosperity. We owe it to our children and grandchildren.