Gareth Fearn argues, and I absolutely agree, that governments are so captured by neoliberal thinking that some types of companies or sectors are seen as “too big to fail”. This leads to them being bailed out, which is a capitulation to a kind of ‘ransom capitalism’.
Bailouts are an ideal intervention for a decaying neoliberal politics: they maintain capital flows, rising asset prices and the upwards redistribution of wealth, while supporting the minimum needs of enough of the population to prevent total social breakdown.
British politicians’ responses to soaring energy prices conform to the bailout consensus. Boris Johnson is promising ‘extra cash’, though leaving it up to his successor to work out the details (Liz Truss and Rishi Sunak have so far mostly offered tax cuts). Ed Davey, the leader of the Liberal Democrats, recently proposed an ‘energy furlough scheme’: the government would absorb the cost of rising energy prices and get some of the money back with a windfall tax. Labour soon followed suit, offering a similar cap to energy prices funded through some slightly more creative accounting.
In both cases, energy companies would receive large amounts of public money (at least £29 billion) to enable them to continue charging their customers sums that many cannot afford. With these proposals following so closely behind the pandemic bailouts, which had the backing of all UK parties, we can see there is broad support for such extraordinary interventions with very little thought being given to the causes of the crisis – beyond criticism of the outgoing prime minister’s personality.
There is an underlying assumption that at some point there will be a return to the ‘normality’ of self-regulating markets of private actors. But bailouts without structural change keep us on the path of ever-increasing losses for the public just to sustain the basics of life, while maintaining a failed market system which is not only generating crises but limiting responses to them – as many nations in the Global South have experienced for decades.
High inflation is not unique to the UK, but the capitulation to the energy companies’ ransom demands seems especially acute here, as is the actual rate of rising costs. France is able to lower prices through its state energy company, Spain and Germany have intervened to reduce the cost of public transport, and many of the proposed measures across Europe involve taking equity in energy companies or stricter regulation. But the UK is too far down the neoliberal rabbit-hole even to countenance such mild social democratic policies.