UK PM David Cameron's failed politics of austerity
Firefighters battled a large fire that broke out in shops and residential properties due to rioters in Croydon on August 9, 2011 in London, England.
August 11th, 2011
02:15 PM ET

UK PM David Cameron's failed politics of austerity

Editor's Note: Matthias Matthijs is Assistant Professor at the School of International Service of American University and a Lecturer at the Johns Hopkins School of Advanced International Studies. He is the author of Ideas and Economic Crises in Britain From Attlee to Blair.

By Matthias Matthijs, ForeignAffairs.com

London is burning. And over four consecutive nights, the conflagration has engulfed multiple cities across the United Kingdom, including Manchester, Birmingham, Liverpool, Bristol, Nottingham, and Leeds. According to some early estimates, the total cost of the vandalism and extra police could run into the hundreds of millions of pounds.

In response, British Prime Minister David Cameron has recalled parliament from summer recess for an emergency session, “to stand together” against the looters. He condemned what he dubbed the “sickening scenes of people looting, vandalizing, thieving, and robbing.”

The unrest traces its immediate roots to last Saturday in Tottenham, a London suburb where a protest to commemorate the death of a man who was shot by police trying to arrest him turned violent. What followed was a viral response across the country that spurred many young people to violence, looting, and general disorder.

The riots are set against the backdrop of Britain’s ongoing fiscal and sovereign debt crisis and the coalition government’s politics of austerity. They illustrate the critical connection between class politics and fiscal retrenchment. In some ways, they resemble the British riots of 30 years ago. But the policy solutions of the past - a strong response by the state together with the fruits of neoliberal deregulation - may no longer be available today.

During the summer of 1981, the United Kingdom saw the Brixton riot in London, during which Afro-Caribbean young people battled with the police and set cars and buildings on fire, as well as parallel outbreaks of social unrest in Liverpool. (Coincidentally, 1981 also saw a fairy tale royal wedding. One year later, British troops engaged in active military combat abroad; the Falklands and Argentina then, rather than Libya and Afghanistan today.)

The most important parallel between the United Kingdom in 1981 and today is economic. In 1979, after constructing a “winter of discontent” - during which public-sector unions battled an exhausted Labour government - as a “crisis of the state” that required her decisive intervention, Margaret Thatcher swept to power as the country’s first female prime minister. But her Conservative government would soon face a summer of discontent in 1981 over what is known colloquially as “austerity politics.”

Cameron has also adopted an austerity program of his own but for different reasons. Whereas Thatcher’s austerity program undercut the power of the trade unions and reduced inflation, Cameron’s austerity program - a response to the bank bailouts of 2008 - hoped to inspire what he called a “Big Society” that would spontaneously replace state functions (such as youth centers, elderly care, and so on) with volunteer citizen efforts.

Although Thatcher and Cameron differed in overall intent, they shared the same method: slashing public expenditure. The problem with doing so, then as now, is the unequal burden that such cuts put on various parts of the United Kingdom’s income distribution.

Whereas the country’s top earners can afford alternatives to state largesse and thus do not feel the weight of fiscal austerity, fiscal retrenchment hurts those at the bottom who directly rely on government services such as welfare, public education, and transportation. Put simply, those who do not rely on state functions have no incentive to replace them, whereas those who do rely on them have no means to do so. Conversely, tax increases hurt those at the top while sparing those at the bottom, so long as the tax is progressive.

Since Thatcher was explicit about targeting the welfare state - her cuts to welfare were expected and her taxes were regressive - her policies were predicted to cause social strife among those at the bottom. Thatcher instinctively understood that her austerity politics required a strong state to police the dangers posed to the social fabric by exposing whole communities to the sharp end of the free market. For this reason, she increased the police budget and available manpower - and actually “planned” for civil disorder. When it hit, she was ready.

In contrast, today’s riots seemed to catch Cameron completely off guard. He sold the public on the idea that the total cost of the bank bailout in 2008 would require a turn to austerity to balance the books. In a sense, the 2008 financial crisis was rather convenient for Cameron and his chancellor-in-waiting, George Osborne, who came to office wanting to reduce the size of the state drastically. Indeed, since Cameron formed his coalition government with the Liberal Democrats in May 2010, cuts easily outpaced tax increases on a scale of four to one.

However, unlike Thatcherite austerity, everything was to be cut now: civil service, benefits, even the army and police. The state had to be slashed in order to save the state. It is thus ironic that Cameron occasionally likes to stress his Thatcherite credentials; he seems not to have read her playbook on how to make austerity policies actually stick.

Cameron forgot that rising income and wealth inequality, starting in 1979 with Thatcher and continuing under New Labour in the 1990s and 2000s, is of great consequence, especially when inequality expands rapidly in an economic bust. In the boom of the 1980s and 1990s, consumption rose thanks to the expansion of consumer credit and massive increases in overall personal debt, which occurred as a result of deregulation and liberalization.

Average U.K. household debt in 1990 was well below 100 percent of total income; by 2007, it had grown to over 160 percent. Since the onset of the 2008 financial crisis, available credit to maintain this debt plummeted. And although the state stepped in to rescue the banks, no one stepped in to save the poor. Instead, they face cuts to welfare and social programs.

However, unlike in the United States, London’s financial elite are demonized and vilified in the mainstream media. The tabloids and the Rupert Murdoch-dominated press have created a narrative that describes bankers carrying on as they did before, raking in record bonuses, eating at expensive restaurants, and vacationing in the French Riviera as if the crisis never happened. The only perceived villain in the 1981 protests was Thatcher herself. However, today’s rioters, like the rest of the population, understand that the debt crisis is first and foremost a bankers’ crisis. The result, as in 1981, can hardly be unexpected: violent reaction among those most affected. The only question is why Cameron did not foresee it.

Whereas the 1980s riots had a significant element of racial tension, the bigger battle of that decade was between organized labor and the state - a fight the Thatcher government won hands down. Both rioters and unionists were finally subdued by a strong state, not replaced by the sort of mythical Big Society of which Cameron dreamed. By the time the battle was over, around 1986, unemployment had fallen, economic growth had started to pick up, and the benefits (or so they seemed until 2007) of market liberalization were reaped in the form of higher mass consumption and rising home and stock prices. Until the bust came, class politics had been abolished and Thatcher’s approach had been vindicated.

Today, the battle lines are drawn quite differently. Class politics are back, but in a new way. The 1980s were marked by a more traditional struggle between the state and organized labor. The present moment, however, is defined by a more disorganized class politics of reaction, propelled by huge inequalities and a perceived injustice and indifference by the state to the fate of those involved. This time it is also not about race.

The looting youngsters in London are a mixture of both immigrants and English natives, and they have quickly and deliberately made their way into the fancier neighborhoods of the city. An incident from the much-gentrified Notting Hill neighborhood in London is particularly telling. Hooded rioters armed with bats invaded the Ledbury, a two-star Michelin restaurant, demanding that diners hand over their wallets and wedding rings. As two female rioters told the BBC [2], “We’re just showing the rich people we can do what we want.”

Most likely, as David Lewis-Baker from the University of Warwick argued, Cameron will frame the current riots as a “crisis of the family” rather than blame his own austerity policies for explaining the disaffection among the youth in the country’s underprivileged neighborhoods. His ideological counterpart in France, President Nicolas Sarkozy, tried to do much the same in 2005 as interior minister, when he famously referred to the protesters in Paris’ banlieues as “rabble.” The main problem for Cameron’s austerity politics today is that the benefits of neoliberalism from the 1980s - higher consumption thanks to ever more personal debt - are no longer on the table.

So class politics are back in what many political scientists see as their most traditional home: the United Kingdom. Most of the country perceives Cameron’s policies as the poor paying for the mistakes of the rich. Thatcher’s neoliberal medicine was equally unpopular in 1981, but she was under no illusions as to what was required to enforce austerity and remains famous to this day for having argued in a 1987 interview that “there [was] no such thing as society.” Cameron’s assumptions have been challenged by these riots, and it is not at all clear that he has an alternative to offer. The rest of the world should take notice: After all, the perverse experiment of high inequality, low growth, and now fiscal austerity is hardly a uniquely British phenomenon.

The views expressed in this article are solely those of Matthias Matthijs.


soundoff (17 Responses)
  1. AC

    It is not merely the austerity measures: it is primarily the uneven manner in which the axe was used. Had the suffering been distributed in a more equitable fashion, the anger would be less deeply felt. The wealthy will not notice any significant differences in their lives; the middle class and the poor are expected to suffer significant hardship (with a stiff upper lip), to enable the aristocracy to conduct business as usual.

    The non-wealthy are justifiably angry that the people that caused this worldwide economic implosion will suffer none of the well deserved consequences of their actions, instead using their pawns in Parliament to shift the consequences onto those least capable of defending themselves in the political arena.

    August 11, 2011 at 4:50 pm | Reply
    • j. von hettlingen

      No, David Cameron doesn't want to admit that his austerity measures gave rise to social unrest! Instead he put the blame on the police, which had used the wrong tactics and was too slow to react. Cameron maintained, the riots were nothing but just criminality and bad parenting should also be held accountable.

      August 11, 2011 at 5:25 pm | Reply
  2. Onesmallvoice

    If David Cameron had any sense, he'd stop sending troops halfway around the world to fight for the right-wing thugs in Washington and quit doing their bidding and cut that country's military spending and invest that money in Britain's economy, but he won't unfortunately! In fact, if I were the British Prime Minister, I'd pull England out of NATO in a heartbeat!!!

    August 11, 2011 at 9:15 pm | Reply
  3. JessicaJ64

    Wow! Rarely have I encountered a commentary of British politics by someone who, not only got it wholly wrong, but also identified the dinstinctions between now and the Thatcher years that don’t exist.
    Matthias Matthijs claims that Thatcher’s approach was vindicated because, “by 1986, unemployment had fallen, economic growth had started to pick up, and the benefits of market liberalization were reaped in the form of higher mass consumption and rising home and stock prices. Until the bust [in 2007] came, class politics had been abolished and Thatcher’s approach had been vindicated”.
    He also claims that the riots are the symptom of Cameron’s “austerity politics”, and that the riots in 1981 were racially motivated, claims that there is no such racial today, and that a similarity between 1981 and now is that Britain was at war “with the Falklands and Argentina then, rather than Afghanistan and Libya now”.
    1. Thatcher’s approach was not vindicated, as he states, because he fails to mention that in 1987, she and her then Chancellor, Nigel Lawson, helped trigger a massive world-wide recession, the second under her reign. She clearly did not understand economics, because, while the growth in GDP was sky-high, instead of letting it burn itself out, which it would have done, she had Lawson hike interest rates, causing the growth rate to plummet and panic set in, triggering the second recession under her watch, the first being in 1981.
    Additionally, until about 1985, Britain suffered both high unemployment AND high inflation, thought to be an impossibility until then.
    2. How he can claim her approach as vindicated “until the bust (the one that he refers to being in 2007, the banking crisis) set in’, when she was out of office by 1992 is beyond me.
    3. While the riots have an element of class politics, if you look at those actually involved, now anyway, maybe not initially, they are as much from middle class families, intelligent youths. They are criminals, nothing more. Anarchists looking for a buzz.
    The initial protest that turned violent, was very definitely racial, since it was in protest at a young black man shot and killed by police, while resisting arrest. On the very same estate that sparked many of the riots in 1981.
    In 1981, the National Front (a British white supremacist political party) organized race riots in many towns and cities throughout the UK. So in that respect, he is right. But, now, the British National Party (another such party) has elected politicians. This was not the case back then.
    It is common for racial tensions to flare in times of “austerity”, true now as it was then. Besides, if he would ever visit North or East London to see just how “little” racial tension there is, he might have his eyes opened. I just hope for his sake that his skin color is nothing but pearly white, or he’ll be in for a shock.
    4. As to the military; in 1980 and into 1981, Thatcher’s popularity was abysmal. She was hated, loathed throughout the country. The Falklands Conflict was her savior. We were not at war “with” the Falklands, but over them – The Falkland Islands is a small archipelago off the coast of Argentina – with Argentina. It was a popular “war” and saved her ass in the 1983 election. Oh, and we WERE at war with Libya then too, as now.
    The current war, that aftermath of the Iraqi invasion, was, and remains, deeply unpopular in Britain. Since the revelations from the Judicial Inquiry following the war, in which it came to light that Blair wanted to go to war, and Iraq was a convenient excuse, it is a wonder that he is still alive. The vast majority of the population did NOT want Britain involved in America’s mess, but instead, he made it our mess too.
    5. Finally, he conveniently omits the more significant rioting of 1990, the “Poll Tax Riots”. This was massive civil disobedience that united the country against unfair taxation. It ivolved rich and poor, young and old, and was largely free from the rioting and car-burning that we see today. This was not criminal, thuggish behavior. This was an uprising. A successful one at that.
    So, Mr. Matthijs needs to re-read his history books before making over-simplified narrative and rationales for the rioting. And he certainly needs to take off those rose-colored spectacles he seems to wear each time he mentions Thatcher.

    August 12, 2011 at 12:37 am | Reply
  4. carlos

    Noone was doing homework.... didn't it already happened in France?
    Is it possible that the Gove was unprepared?
    This is what I call a selective threat assessments work....

    http://whencounterterrorismfallsasleep.blogspot.com

    August 12, 2011 at 3:04 am | Reply
  5. Christina H.

    Dear Sir,
    I recently looked at a football game. There is a lot of running, passing, and some piling up; however, there is not too much blocking. I liked to watch the blocking. Then, I noticed the players have no cleats on their shoes!. It is very difficult to block without cleats,because you need the traction. I liked to watch them use their shoulder muscles. I think it is an integral part of football. When did they change this? What is this message sending to our opponent on a worldwide scale? Chris

    August 12, 2011 at 3:50 am | Reply
  6. Max Charles

    These riots are just the latest proof that mass immigration into N. America and W. Europe from the 3rd world, especially the Muslim world has been an unmitigated disaster. Politicians who continue to advocate for it are knowingly and malevolently compromising the safety of their people. This is especially true of left-wing politicians who push gun control because they want ordinary citizens to be helpless against thugs while at the same time working to import thousands of additional foreign thugs every year.

    August 13, 2011 at 11:02 am | Reply
  7. Chris Seymore

    http://lcorps.blogspot.com/2011/08/london-is-burning-because-of-black-hip.html

    August 14, 2011 at 11:19 am | Reply
  8. In Disbelief of David Goodhart

    Re: DAVID GOODHART has woken the sleeping giant with some old tones that remind one of the ignorance of a hateful paste blaming a people stating "those people" have nothing but a culture of violence while not considering of course, causes for that disharmony. My question is why must he label a color to a socio economic problem. Is he dissatisfied with the overall possessive investment in whiteness while giving little note to his "few white kids" who happen to pick up the black culture of violence, hip hop, etc. You know David, England is not at all innocent of a past for making unqiue causes that have affected Asia, Asia Minor, and even America. Here is a hint, if you ever want to gauge the situation of the present, please read more about the past. It will help. England was not innocent of having a superiority complex back in the day. I hope you will hold thy tongue of such "black" comments. The paradox if you dig deep enough will have roots in your own backyard. This problem involves everyone so please address it as such. Poets write, they don't create a problem, actually they alert you far in advance to one. Why do you believe every oppressive nation first starts by arresting its artists, musicians, and activists to peoples rights? Please be the better person especially on GPS. It's my favorite show on Sundays not True Blood. Comments like that may be well placed there than on here.

    August 14, 2011 at 2:23 pm | Reply
  9. Larry H

    The riots didn't surprise me; I've been waiting for the other shoe to drop since the violent reaction last November to the proposed tripling of university fees. Matthjis is right to point out that austerity measures have most deeply affected the least wealthy and to couch it in terms of class. Yes, some middle class youths were involved and criminal acts took place, but the spark and spreading conflagration grew out of class conflict. The British seem comfortable presenting the inconsequential in terms of class (Oasis battling Blur for the top of the pop charts in the nineties was presented as a working class versus middle class battle). However, when it comes to real social unrest most British commentators can't seem to use the term" social class" they bandy about so trivially at other times.
    That it was the young who reacted so violently, both in November and last week, isn't surprising. They see their futures being closed off by government imposed financial and educational limitations, limitations that trap them in their present class and its economic problems. And they've had their noses rubbed in it. The English refer to the rich upper middle class and aristocracy as "posh." Following the cry for help that was at the base of the November incident, there has been a steady stream of posh events: the big royal wedding, a lesser one to a footballer, Ascot, Wimbledon, the Proms. Life at the top rolls past on the television, unaffected by by the pain of the working class and poor. Also, what most other Americans don't understand, and the British aren't discussing, is that in England every time a person speaks they reveal a lot about where they are from and what class they belong to. Listening to David Cameron or London Mayor Boris Johnson – and commentators like those on GPS – the working class hears "posh," the Oxford and Cambridge educated upper crust speaking down to them, dismissing their concerns, and calling them the product of a degenerate inner-city culture, when in fact there is plenty of blame to go around for situation that created these riots and terrible damages inflicted by them.

    August 14, 2011 at 4:43 pm | Reply
  10. lynx Owe

    If we listen to Cameron and change the language we could hear Mubarak, Gaddafi or others that blame the people for their reaction to the excesses of Government. While difficult for many it is obvious to an unbiased observer that the events that are happening in GB and Europe, when put into historical context are a natural outgrowth of the Wealthy, plundering the economy at the expense of the middle class and poor for a long period of time. Discontent and radical action are easily suppressed at first through labeling and profiling. Early on in most societies the most combustible groups are immediately identifiable: they will be a racial group, religious group, immigrants or a Section of the City. Their earlier volatility is to be expected because they will have been disaffected for the longer period. As the disaffection grows their ranks are swelled with others who are sympathetic or lowered in their economic status by the excesses of Government. In time what began as an easily identifiable group grows into a diverse mix of participants who are difficult to target and marginalize along the traditional methods above. While there will be differences within the now Mob, their common enemy will be the Government. Suppression will take violence and then begins the descent into chaos. How to prevent it all requires man to depart from their own nature of greed and lust for power which is not likely or a profound event that shakes the core of our existence forcing everyone into a Mob. The former is not likely and the later until it happens is fantasy.

    August 15, 2011 at 6:15 pm | Reply
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