Is Neo-Liberalism really Fascism Light?

“Fascism should more appropriately be called Corporatism, because it is a merger of State and corporate power.” Benito Mussolini

The UK economy today has some startling similarities to the economy of Nazi Germany and privatisation is at the heart of both. The Spanish economist Germà Bel¹ stated that the word – which is synonymous with neo-liberalism – has its origins in the German word reprivatisierung (denationalisation) and the term was first used in English by the Berlin correspondent of the Economist in 1936 to describe how the Nazi economy worked.

In the totalitarian world of the Soviet Union, the state owned and ran a centrally planned economy. In Nazi Germany, the totalitarian government still did the central planning, but mainly contracted private companies to produce the goods and services required.

Denationalisation first entered academia in 1943 as ‘privatisation’, when Sidney Merlin in the Quarterly Journal of Economics¹ wrote that the Nazi party ‘facilitates the accumulation of private fortunes and industrial empires by its foremost members and collaborators through privatisation and other measures, thereby intensifying centralisation of economic affairs and government in an increasingly narrow group that may, for all practical purposes, be termed the national socialist elite’.

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After the Second World War, the main political parties in Britain had accepted that the UK was a mixed economy, with clear dividing lines between the state and private enterprise. Public transport, council housing, health, education, social services, correctional services, employment services, gas, electricity, water etc were all run and operated by government, centrally or locally, directly or indirectly and there was a varying amount of democratic accountability.

This consensus ended nearly 40 years ago, when Mrs Thatcher came to power and neo-liberalism took the place of the mixed economy. Privatisation has shown that the rhetoric of neo-liberalism and free markets is just that, rhetoric. The reality is that there is still the same centralisation and the only change is the Government and the taxpayers no longer own the centralised companies nor receive any of the profits. In one of his last speeches in the House of Lords, Harold McMillan² (Prime Minister 1956-1963) accused Mrs Thatcher of selling off the family silver, which has over the years included gas, electricity, water, telecommunications, airports, air traffic control, airlines, building societies, the railways, bus services, ferry services and even the Royal Mail.

Today, there are four main ways that the State and corporate power are being merged. There’s outright privatisation, franchising, outsourcing/contracting out and PFI (Private Finance Initiative).

However, whichever method has been used for privatisation it makes no difference to the workers selling their labour into what has been christened the gig economy, which only benefits the bosses not the workers.

Pay goes down and workers have to work longer hours to make the same money. Often, workers are forced to become self-employed with no paid holidays, no entitlement to sick pay and no pension scheme. They also have fewer rights and even trying to form a union can lead to the high court. The employer will claim the workers do not work for the company and they are self-employed; even though their contract often states they are not allowed to work for another company. If the workers openly and democratically vote to go on strike, they are again likely to end up in the High Court.

Often, when workers find that their services are no longer required it is because the employer has found a cheaper source of labour, often migrant labour. But it is wrong to blame the migrants as the blame falls entirely on the companies, the company directors and the company shareholders who are all addicted to a never ending supply of cheap labour.

In the past workers who were made redundant would have been entitled to unemployment benefit but now it is more likely to be Universal Credit. Workers who were just managing can find the 5 week wait for the first payment means that rent can go unpaid and it may also be necessary to go to a food bank. The truth is not that the system is incompetently run but that it is designed to be nasty and, sometimes, leave claimants, literally, sleeping on the streets.

This is nowhere near as bad as in Nazi Germany with its forced and slave labour but it is a lot worse than when there was the mixed economy.

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There is now the horrible reality that far from saving the taxpayers money, the various forms of privatisation are costing the taxpayer money. Additionally, the bills for water, gas, electricity, postal and telecommunication services, travel etc have all increased, whilst the quality of the service has gone down.

This is not surprising because when the different industries were privatised the existing staff carried on receiving their old wages and conditions of service but staff taken on after privatisation were employed on vastly inferior terms not just wages but holidays, pensions etc. Companies then produced financially enticing redundancy offers to those on the higher wages, not realising that what they were doing was getting rid of the people who understood how the company worked, they knew company history. The baby was being thrown out with the bathwater.

The financial savings promised by the politicians have often not materialised and in many cases privatisation has actually lost taxpayers’ money. To understand how privatisation has lost taxpayers’ money there is no better example than the total mess of the railways.

Rail companies tender to operate services on one of the 20 odd franchises and the Department of Transport offers a franchise to the successful bidders.

The rail companies do not own trains but have to lease them from one of the three Roscos (Rolling Stock Leasing Companies): Angel Trains, Macquarie European Rail or Lombard Asset Management.

Finally, the railway track, its maintenance and any upgrading is the responsibility of Network Rail (NR), which is a nationalised company owned and run by the Department of Transport. However, when the railways were privatised in 1994 the company originally responsible for the railway track was a private company called Railtrack, which had to be renationalised in 2002.

One of NR’s responsibilities is the electrification of railway track but NR decided not to employ qualified engineers themselves but to outsource everything to private contractors. This has not been a success and the latest failure is the electrification of the Great Western mainline. The cost so far is some £3 billion; more than three times the original budget and the electrification is still not completed.

Currently, Crossrail in London should have opened in 2018 and there is no guarantee that it will open in 2019. The high speed London to Birmingham line (HS2) is going to cost billions and is already over budget and one suggestion to save money is have the trains travelling at a slower speed!!! You couldn’t make it up.

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Sidney Merlin¹ saw the Nazi Party facilitating the accumulation of private fortunes by its foremost members and, certainly, many Tory Party members, donors and supporters have benefited from privatisation.

Today, it is conveniently forgotten that the financial base of household names such as ThyssenKrupp, Mercedes, BMW, VW, Porsche, AEG, Bayer, BASF, Hugo Boss and many others companies came from the vast profits made under the Nazi government, when there were no unions, few regulations and cheap labour – very often slave labour from the concentration camps.

However, today in the UK many of the companies that have made fortunes for their shareholders are now finding themselves in financial trouble. The collapse of Carillion, a multinational facilities management and construction company in January 2018 has frightened many financial investors, the markets and financial commentators. On 15th March 2019 Interserve, another large multinational facilities management and construction company, entered administration. Whatever the final outcome, the only certainty is that the British taxpayer will again be out of pocket.

Many other companies still have a big question mark about their financial exposure including Kier, Serco and Capita and no doubt others, as yet, unknown. Kier had to go to the market for £260 million at high rates of interest to keep its bankers happy but for how long?

How many other companies are similarly exposed? Have companies that did so well from privatisation squandered those vast profits by paying large dividends to shareholders? Have companies been bidding for contracts at prices below cost so that they could keep their cash flow going. Are they robbing Peter to pay Paul?

We can watch the demise of UK neo-liberalism on our television screens and every time we look at our bank statement showing the cost of the privatised utilities. The more we look at the artificial creation of these jack of all trades companies, the more it seems to be a massive Ponzi scheme.

The British taxpayers are still paying the cost of the bank crash in 2008 and there is now the terrible thought that these bloated, financially engineered companies will be the next financial crash.

¹http://www.lrb.co.uk/v34/n17/james-meek/how-we-happened-to-sell-off-our-electricity*

^{2https://www.youtube.com/watch?v=G1ssGrq5S3w}

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