There are many strands of free market thinking. Adam Smith believed it was a branch of moral philosophy. For Ayn Rand, it was a branch of pop philosophy. Milton Friedman would be the first to admit that free market capitalism is idealistic. There is a utopian aspect to the notion that simply liberating capital from all constraints would bring about a free, prosperous society.
However, anyone who reads Britannia Unchained — the 2012 manifesto that UK Prime Minister Liz Truss and her Chancellor of the Exchequer, Kwasi Kwarteng, wrote with other Conservative MPs — would instead find a remarkably dystopian vision of free market economics.
Aside from the warning that an increase in government borrowing could raise interest rates and sink investment — which, ironically, Truss and Kwarteng did not heed when putting together their “mini-budget” — Britannia Unchained is unmoored from economic reality. Instead, it is an odd combination of Victorian self-help cliches, Randian platitudes and incongruous factoids presented in a strange stream of consciousness style.
Truss, Kwarteng and their coauthors depict the UK as a “risk-averse society” that is “doomed by nihilism.”
Saving it would require a “frontier spirit” that can tap into the sort of growth that the US enjoyed at its founding. The authors seem to have given little thought to the government appropriation and mass genocide that characterized the US frontier.
The two “frontier” protagonists tasked with building the new Britain are the London “cabby” and the “buccaneer” venture capitalist. The authors juxtapose hardworking cab drivers with unionized Tube drivers, whom they call “grifters” with “public sector pensions” whose place is among the “idlers of the world.”
It is worth bearing in mind that London public transport workers stayed at their posts and died in large numbers during the COVID-19 pandemic, while many taxi drivers have not returned to work, fueling an acute cab shortage.
However, Britain’s most essential citizens are not taxi drivers. According to the authors, that title belongs to the venture capitalists with the “chutzpah” to take bold risks.
The authors are concerned that young Britons model themselves not on these fearless capitalist buccaneers but on reality TV stars, whom they see as sapping the UK’s work ethic. The Apprentice, the television show that made former US president Donald Trump famous, is an exception: The authors seem to think it is unscripted.
All young Britons should look up to the daring venture capitalists who, the authors claim, created Silicon Valley and instigated Israel’s tech boom. Youth of Britain, take note: it takes ￡1 million to ￡5 million (US$1.1 million to US$5.7 million) to make an impact as a venture capitalist, and the average VC fund has about ￡20 million in assets.
At this point, the authors lose all interest in research and real-world figures. They laud California’s Silicon Valley and Israel’s Silicon Wadi, but appear to be ignorant of basic facts about how either came about. For example, it is common knowledge that Silicon Valley owes its existence to the US military. IBM and Varian Medical Systems got off the ground thanks to government contracts and federal-and-state-funded education and research. It was only after those initial government investments that venture capitalists showed up.
Even SpaceX and Tesla CEO Elon Musk, self-styled libertarian and the US’ favorite tech maverick, has received government support: US$6 billion in contracts, another US$6 billion in electric vehicle rebates, and billions more in grants and loans, including US$60 million in subsidies from the state of Texas. However inventive and productive he may be, Musk owes his empire to the largesse of Uncle Sam.
Truss and Kwarteng equate venture capital with deregulation. Yet they fail to mention that California, at just over half the size of the UK, has higher overall taxes and more stringent regulations, yet still attracts nearly five times as much venture capital investment. Although California’s GDP amounted to US$3.4 trillion last year, the UK’s was an estimated US$3.2 trillion. In per capita terms, California is producing a little under twice the GDP of the UK.
These are the kinds of statistics one would not find in Britannia Unchained. Instead, the authors tout Canada — a country with vast natural resources and a little more than half of the UK’s population — as a model to emulate. They neglect to mention that Canada is hardly a tech-driven economy: It has about a third of the UK’s venture capital expenditure.
While the UK-Canada comparison makes little sense, the book’s thesis comes into focus when it contends that China’s fast-growing economy is the result of individual initiative rather than state planning. While the authors admit that “effective government policy” had something to do with China’s rise, they ignore the massive state subsidies for companies, the opaque sovereign wealth funds that injected vast sums into Chinese venture capital firms and the dangerous borrowing that accompanied this process. China would be the first to acknowledge the role of large-scale state investment in facilitating the country’s rapid growth.
However, such nuance is too much for Britannia Unchained.
The book concludes by naming Brazil, of all places, an “optimistic” model for Britain’s future. Although the comparison must have seemed odd when the future prime minister and chancellor made it in 2012, today it looks prescient. Their mini-budget, as former US secretary of the Treasury Larry Summers said, has made the UK look like “an emerging economy.”
Britannia Unchained’s sheer weirdness and seemingly intentional lack of coherence are breathtaking. It is terrifying to think that British Conservatives read this book and still picked Truss. Reading it today, with the benefit of hindsight, one cannot help but recall the famous line from Percy Bysshe Shelley’s Ozymandias: “Look on my Works, ye Mighty, and despair!”
Jacob Soll, a professor of philosophy, history and accounting at the University of Southern California, is the author of Free Market: The History of an Idea.
Copyright: Project Syndicate
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