Theresa May and the paradigm change

Note kindly transslated by Anne-marie de Grazia

An event of considerable importance has just occurred in Britain, which could well be announcing an important turn in British politics, as well as in France and in several other European countries.

Mrs Theresa May, the British Prime Minister who has recently succeeded to David Cameron in the wake of the referendum on Britain’s exit from the European Union (the notorious BREXIT) has just taken a logical yet, in the context of her country, quasi revolutionary step. Presiding the first meeting of the inter-ministerial commission on “economic and industrial strategy” on Tuesday, August 2nd, she committed herself to setting a-foot a true industrial policy. In a Great Britain that has been ravaged by more than 35 years of “neo-liberalism,” this is tantamount to a small revolution. The fact that it was launched by a Conservative Prime Minister, of the very party of Margaret Thatcher, stresses its revolutionary character even more.

It announces a change in paradigm. The latest studies by organizations such as the IMF are depicting and appraising globalization in a far more negative manner than was the case fifteen years ago. We are beginning to understand today that the concept of globalization, such as it was advocated by the IMF (ten years ago) or the OCDE, is not the solution. A return into grace of some kind of voluntarism, already noticed with Arnaud Montebourg in 2012-2013, is obvious.


A revolution ?

We must be attentive to this decision, which is merely translating into action what was already contained in Theresa May’s speech of investiture. The government spokesman declared in a communiqué published after the inter-ministerial meeting: « The Prime Minister has stressed that the goal of the new industrial strategy should be to implement an economy which would function for everybody » [1]. What does this mean? There is an obvious opportunistic dimension to this policy. But that is not the end of the story. Theresa May had declared before the meeting that if Great Britain wanted to « profit from the opportunities offered by the Brexit, our whole economy must be put to the task ». If the measures themselves are remaining blurry for the time being, it remains that it is the first time that a head of a British government is stating her interest for the secondary sector, since Margaret Thatcher has buried the very concept of an industrial policy more than thirty years ago. This new industrial policy will lead the government to help the industries which make the strength of the UK, such as the automobile industry (Jaguar Land Rover) and aeronautics with BAE Systems, but also the new industries, such as the maker of electronic chips ARM Systems, which was sold to Japan Soft Bank in July for 32 billion pounds, that is 38 billion euros. Even the steel industry might benefit from help: Tata Steel had announced at the end of March the sale of its activities in the UK, thus imperilling thousands of jobs. In the end, they declared that they want to revise their thinking, and they have engaged in negotiations with Thyssenkrupp for eventually creating a joined enterprise. The fall of the Pound Sterling does indeed favorably modify the competitiveness of production in Great Britain. The pharma-group GlaxoSmithKline has announced last Wednesday investments of 275 million pounds in its production sites in Britain. [2]. This group is preparing for an auspicious second semester due to the decrease of the value of the Pound Sterling, as its costs will be in pounds and its receipts in other currencies.


The depreciation of the pound and beyond

The depreciation of the pound constitutes an element in this industrial policy. Granted, it’s a primitive one. But one has never seen an industrial policy in a country whose currency is overvalued. As it happens, a study of the IMF shows that on average the real exchange rate of the Pound was overvalued by 12,5% in 2015[3].

If we follow evolutions since the referendum on the Brexit, we must note that the present depreciation has corrected part of the unbalances which have built up since the beginning of 2014. We can consider that the rate of 0,85 Livre for 1 Euro corresponds today to Britain’s needs.


Graph 1

A - 01 GR1Bis 

Source : Bloomberg


But it is clear that an industrial policy cannot limit itself to strong a currency depreciation.

The committee announced therefore that it would support the training of qualified workers, who are increasingly in demand in the industry, and other measures favouring investment could be announced, the more so that Britain will soon find itself free of the straightjacket of EU rulings. Some element of town and country planning can also be made out in this industrial policy. The Minister of Finances, M. Philip Hammond, estimated at the committee meeting that the reduction of the gap in competitiveness between London and the rest of the country, which is the aim of this policy, should bring 9% in growth, and rake in 150 billion pounds more (179 billion euros) into the till of the State. [4].


The foundations of a political turn-about.

This policy has surprised observers because it shows a dynamism of which Britain had no longer been credited with. It goes against the grain of all the catastrophist prognostications smugly bandied about, particularly in France. The Bank of England shows this in a study dating to July 20 [5] and states clearly: « For the time being, there is no clear indication of a sudden and generalized slow-down ». The labor market remains well disposed [6], and the consumption of households has increased by 1,1% in July, one of the best results of these past months [7]. Far from being the catastrophe it was announced to be, Brexit is taking place peacefully. Of course, important problems are subsisting. The uncertainty generated by the separation with the EU could compromise investment. And it is precisely for this reason that Mrs Theresa May has adopted her voluntarist policy. It is clear also that she is intent on finding back to a dynamics lost before the Brexit [8].

This policy also surprised observers because it shows a will to rebuild an economy on a base more just, one that, to restate Theresa May’s words, will profit to all. She has put her mandate under the imperative of the fight against “burning injustice:” “That means fighting against the burning injustice that if you are born poor, you will die on average nine years earlier than others. If you’re black, you’re treated more harshly by the criminal justice system than if you are white. If you’re a white, working-class boy, you’re less likely than anyone else in Britain to go to university. If you’re at a state school, you’re less likely to reach the top professions than if you were educated privately.

If you are a woman, you will earn less than a man. If you suffer from mental health problems, there’s not enough help to hand. If you’re young, you’ll find it harder than ever before to own your own home. [9] These words could have been (and should have been) said by Jeremy Corbyn, the leader of the Labor Party. The fact that they were pronounced by a Conservative Prime Minister is prima facie astonishing. That this Prime Minister wants to fashion a country that “works for everybody” and overtly takes position for a voluntaristic policy should not surprise those who remember the “great tradition” of British Conservatives, one that is in fact opposed to the neo-liberal politics of Margaret Thatcher and the roots of which go back to Benjamin Disraeli, the author of Sybil[10], a social novel of the mid XIX century.


Sovereignty and the Labor

It is significant therefore that the Brexit should have freed a fraction of the Conservatives from the « neo-liberal » ideology. We must take note of a study made by a politologist in Britain showing that nearly 70% of the wards having elected a Labor MP, have voted « leave, » when the Labor Party itself was officially campaigning for « remain »[11]. This well illustrates the contradiction existing between the opinions defended by the cadres of the party and what is felt by the militants or the sympathizers of the base. The contradiction is the more obvious, that one might have thought that the odious murder of the Labour MP, Jo Cox, one week before the vote, would provoke a movement of sympathy for « remain. » However, if such a sentiment may have existed, it was not sufficient to reverse the tendency of opinions. Because Labour voters realized, be it confusedly, that no break with neo-liberalism was possible as long as the UK remained tied up with the European Union. If Jeremy Corbyn finds himself in a tight spot today, he has only himself to blame for his lack of coherence. This lesson is valid for the whole of the European Left.

In order for a turn-around in politics to occur, for a break with Thatcherian « neo-liberalism » to be possible, the UK needed to find back its sovereignty. Which it did through the Brexit. We can see by this that the notion of sovereignty cannot be shut in into categories of “left” or “right.” Not that these categories are not necessary to the debate. But they are covering diverging appreciations over what constitutes the “common good,” appreciations which are possible only within a society, a Nation, a State which are sovereign.


A change of identity ?

Forthwith, we can understand that the idea of a « left » sovereignty, just like the one of a « left » exit from the euro are a dangerous baloney, in which too many of our beautiful minds are still indulging. A door must be either open or closed, and, up to a point, it doesn’t matter which hand grabs the handle to open or to close it. If a door needs to be opened, it is no use being choosey about who will open it. But, once the door is open, the question will arise of what direction one will be taking, and that’s where the differences between “left” and “right” will find back their full meaning. Having solved a problem which is of the order of the political (the confrontation friend/enemy) it allows politics to take back its seat.

However, it happens that the Brexit has brought the change of identity within the Conservative Party that we have indicated. The turn taken by Theresa May could well pre-empt the debate. By occupying on the economic and social terrain the positions which should have been adopted by the Labour Party, and in doing so, moreover, with the legitimacy given to her by the Brexit, Theresa May has the opportunity to occupy the whole of the political space. She may well have achieved a master stroke.











[10] Disraeli B., Sybil, or The Two Nations, Londres, Henry Colburn, 1845.

[11] Chris Hanretty, Most Labour MPs represent a constituency that voted Leave


Jacques Sapir

Ses travaux de chercheur se sont orientés dans trois dimensions, l’étude de l’économie russe et de la transition, l’analyse des crises financières et des recherches théoriques sur les institutions économiques et les interactions entre les comportements individuels. Il a poursuivi ses recherches à partir de 2000 sur les interactions entre les régimes de change, la structuration des systèmes financiers et les instabilités macroéconomiques. Depuis 2007 il s'est impliqué dans l’analyse de la crise financière actuelle, et en particulier dans la crise de la zone Euro.

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