The secret state: spending cuts and the end of compartmentalised Keynesianism

The coalition government will announce the findings of its Spending Review next month. In other words, the cuts are upon us. Several media outlets are running ‘cuts watch’ features, and there is an understandable frenzy underway among stakeholders of all shapes, sizes and political stripes about how cuts will impact on their particular interests. Every other day we have senior members of the government, and Nick Clegg, out and about making speeches and conducting interviews about how these cuts are necessary but fair.

Representatives of the commentariat have also been busy talking to ‘the general public’. While the government is asking us for ideas, journalists and pollsters have set themselves the task of proving how incredibly stupid and selfish we are. You see, a strange thing happens when we get asked about public spending. We say that government should cut waste – but nothing that I personally benefit from could possibly be classified as waste, we add. We say that government should cut benefits to scroungers – but the benefits that I personally receive are entirely legitimate, we argue. And we say that government should raise taxes on the rich – but I myself am far from wealthy, we explain.

I don’t want to sound flippant, nor to challenge the wisdom of the public at large. But it is clear to me that there is huge uncertainty among most people in Britain about what the state does and why it does it. I am about to embark on a gross simplification, but I would suggest that this is a product of the depoliticisation of public life. We don’t even think about the fact that free bus passes for the elderly or SureStart centres, for example, are items of public expenditure that cost taxpayers billions. We’ve lost a sense of the bigger picture and are concerned purely with our own back yards. The New Right and Thatcher told us to think like this. We were told it was natural to think like this.

And then New Labour came along and said it is even okay for socialists to think like this. They told us there was no point bothering with politics anymore, because globalisation had stolen all of our power anyway. But not to worry, globalisation is a merciful god; the promised land is a globalised space. The great paradox is that these governments who, influenced by neoliberal dogma, told us that the state is dead, actually expanded the reach and size of the public sector more than any government since Attlee’s.

It’s an open secret. Even if one did want to try and generate an understanding of what the state does, in order to think about cutting it back, just where would you start? The state has been sliced up into so many different agencies and layers of governance it’s hard to know what is public spending and what isn’t. It is compartmentalised Keynesianism: creating jobs for middle-managers otherwise redundant due to technological change. The market cannot and will not employ the growing middle-class. So the state must. This is roll-back, baby, neoliberal style.

Neoliberalism hit the rocks when the financial crisis came. It sank without trace when financial crisis led to the banking bailout and caused a fiscal crisis. The secret growth of the public sector can no longer continue unabated. But given that we’ve had two generations of collective denial about the functions of the state, developing consensus on what to do about it is going to be impossible.

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