A Case Study in State-Backed Neoliberalism

Photo by Erik Christensen

In the 70s and 80s the United Kingdom struck black gold. The North Sea, which was most commonly used at the time for fishing, was discovered to have large deposits of oil and gas. The following rush to harvest it was extraordinary, with the UK, Norway, the Netherlands, Belgium and Germany all kicking up their efforts to take advantage of this new resource. The economic consequences for Thatcher’s government, which spanned the whole of the 80s, was immense. The UK started to export more oil than it imported for the first time ever, and the income gained came to make up 10% of her treasury’s revenue.

This historical moment sounds incredibly when removed from the context of the government’s decision. The reality of its success, however, becomes apparent when you compare Thatcher’s treatment of Britain’s oil reserves with one key nation: Norway. Unlike the UK, Norway treated the oil as though it was a public resource, having a nationalised oil company extract and sell it; the profits of which going into the hands of the Norwegian government. Thatcher, in keeping with her own neoliberal beliefs, handed the oil over to private companies. She made billions from the arrangement, no doubt, but those billions mean nothing today compared to the nationalised program in Norway. The Natural Resource Governance Institute makes note of this, citing the $470 billion raised in revenue for the UK compared to a whopping $1197 for the Norwegian government. This is despite both countries extracting similar amounts of product. Business for Scotland also laments this lost, alongside a contemporary tax program that made the UK the only country to lose out in tax revenue to multinationals like Shell.

The sociologist and historian Guy Standing explains the situation wonderfully in his 2019 work, Plunder of the Commons:

‘Leaving aside the contentious issue of whether this is British or Scottish oil, it should have been exploited for the benefit of the whole of society. Applying the Hartwick Rule, future generations should also have benefited. Instead, there was a huge rental transfer to an elite and windfall gains for middle-income earner in the form of tax cuts.’

So whilst the UK has stood to gain relatively little compared to their Scandinavian neighbour, Norway has fully realised the capabilities of this resource. Their wealth fund, which was created shortly after the oil was discovered, is being used to make investments that attempt to guarantee the future well-being of the people; whether this building up the fund’s market strength, investing in local technology and infrastructure, or growing Norway’s renewable energy market. On the fund’s own website, their real estate investment report has the London skyline as its front cover. The Norwegian government now has a sizeable portfolio of London homes, backed by a fund that is only outdone by China and the United Arab Emirates. The United Kingdom, meanwhile, has no such fund.

The benefits of the Norwegian model seem obvious. Why did Thatcher not go the same way they did, and make her country billions more in the process? Well that, like many political decisions, is down to ideology, and Thatcher, despite her economics now falling into the realm of “common sense”, was full of it. This ideology is what we now call “Thatcherism”, an especially British form of neoliberalism, which centred around the Austrian economist Friedrich Hayek, and a special book of his called The Road to Serfdom. This book was to classical liberals what Mao’s Little Red Book was to Chinese Marxists. The most vital connection between her ideology and that of Hayek is perfectly summarised by the Margret Thatcher Foundation:

‘Two related elements of the book’s argument held a powerful place in MT’s long-term thinking. She absorbed deeply Hayek’s idea that you cannot compromise with socialism, even in mild social democratic forms, because by degrees socialism tends always to totalitarian outcomes, regardless of the intentions, professed or real, of its proponents. And she saw that her own party had done just that, putting her deeply at odds with its collective leadership. She took to heart the book’s ironic dedication, “To Socialists of All Parties”.’

Hayek’s doomsday attitude about social-democratic nations turned out not to be true, but either way it led to a rampant spell of privatisation on behalf of Thatcher. In the years of her government she oversaw the increased power of finance, the stripping of public assets like British Airways, Petroleum and Gas to private investors, and commandeered over the shutting down of factories and mines in the north. Ironically, none of this could be done without the brutal actions of the state. A fact I am sure the beaten down mine-workers of her decade could attest to.

In the decades since her rule we have been witness to a dramatic shift in the centre ground of politics. Economic “common sense” now means viewing the material and non material in terms of their “market value”. Common goods which should be valued for the way they care for humankind, like healthcare, housing, or work, are now only considered worthy if they can stand up to market forces. None of this could have been achieved without the state, despite Hayek’s libertarian prophesying, which acts as the gatekeeper of private interests. For the anarchist it is easy to see this trend throughout history. Whether it was the East India company enforcing world trade with gunboats, US agencies destabilising socialist governments in order to open up their markets, or Chinese companies embedding themselves in the infrastructure of African nations, capitalism and statism go hand in hand. Guy Standing illustrates this well when comparing the modern market to the supposed Gilded Ages of the US in the 1800s:

‘One similarity between the two Gilded Ages is open dismissal of “free markets” and “competition” by leading entrepreneurial figures. J. P. Morgan, the financier who at the beginning of the twentieth century played a pivotal role in establishing the supremacy of US finance, openly opposed free markets. Today, the mega-investor Peter Theil, co-founder of PayPal and in 2016 a major funder of Donald Trump’s presidential campaign, dismisses competition as a “relic of history”’.

So, despite the claims of free-market economists, our privatised world is hardly competitive, democratic, or imbued with the values of liberty. Instead, private companies rule supreme will little to no accountability. The state panders to their interests with its laws serving to protect rather than to manage it. So whilst businesses can avoid tax, break employment law, or kill and maim their workers with only a slap on the wrist, the common person who infringes on their welfare conditions, or misses a council tax payment, will be immediately punished.

Thatcher’s decision to privatise British oil companies was only the natural result of her dangerous ideology. North Sea oil served her and her government well, but never did she see it as something that should serve the people of Britain. In Norway, all effort was made to make sure that the future citizens of the country would benefit in the long term. That oil belongs to them, not to the greed of CEOs and shareholders. Their fund became what the Economist called ‘perhaps the most impressive example of long-term thinking by any Western government’, whilst the UK, hampered by short-sighted neoliberalism, has not seen the benefits.

As anarchists, we must see the situation in Norway as an example of what happens when common resources are seen as vehicles for expanding common well-being. What we must also see, however, is that the positive outcome of state-controlled resources in that country is perhaps also down to good luck. What’s to say that their wealth fund could not have been used for rampant neocolonialist projects, like the funds of China of the United Arab Emirates, or that the government of Norway might not regress into conservatism, just as Sweden, another bastion of social democracy, shows signs of doing.

We can only imagine what may have happened if these resources were owned, worked on, and the profits earned by the local communities nearby them. What if an association of people determined where and how those resources would be invested? Do we think that local people, who at the time saw the results of deprivation in their personal lives, would have delivered that wealth into the hands of private companies? The limits of the parliamentary system in the United Kingdom, and beyond, are stark for everyone to see when a government miles away may strip the people of their common rights.

We may only learn these lessons from history, and spread them to others.