I've spent a lot of time this year teaching and writing about the veto power of capital in democracy. Wealth-holders can exercise disproportionate power in democracies in two main ways. First, they can individually use their money to buy policy influence by lobbying and funding the political campaigns of friendly candidates (or owning newspapers). Second, they can, as a group, go on 'capital strike' if the 'wrong' government gets elected, sinking the economy and making everyone worse off. Put together, these two channels of political power allow a small number of wealthy people to counteract the numerical advantage in democracy of the poor and middle income majority.
The UK election we're about to hold has brought these mechanisms together in quite spectacular fashion. We are told by newspapers owned by wealthy magnates that a vote for Labour will result in economic meltdown, due to Labour's 'incompetence'. This is nonsense. There is no reason to suppose that Ed Balls, a PPE graduate, Financial Times leader writer, former Chief Secretary of the Treasury and so on, is less qualified to actually run the economy than, say George Osborne. Yes, there is the small matter of the global financial crisis that Labour presided over in 2007-8, but despite the propaganda, nobody was warning of that at the time, and Brown's government actually did a pretty good job of dealing with the crisis once it had happened. Nor is there any evidence the economy systematically performs better under the Conservatives: growth rates under Labour and Tory governments are indistinguishable averaging around the trend rate.
(Andrew Sentence: pic.twitter.com/IzBhJs7ncN)
So Labour's supposed incompetence compared to the Conservatives, is a fiction.
What is not a fiction is the blackmail power enjoyed by capital, but it is probably a bluff. If growth rates are historically roughly the same under Labour and the Conservatives, then it can't be the case that capitalists really do withdraw their money when Labour get elected. But despite the facts, the threat of Labour 'incompetence' and capital flight appears to be believed by a significant number of voters. British Election Studies have shown time and time again that a majority of British voters favour the broad principles of redistribution from rich to poor, are more concerned about unemployment than inflation, value public services and trust Labour more to run the health service and the education system. Despite the supposed popularity of the coalition's austerity policies, the number of British voters that actually prefer a smaller state is vanishingly small:
Courtesy of @flipchartrick: https://flipchartfairytales.files.wordpress.com/2014/10/key_findings_figure_0-3_499x317-jpg.png
So Labour's dilemma is that although voters are mostly more sympathetic to their broad social aims than those of the Conservatives (and not surprisingly, since most voters benefit from redistribution and public provision), the fear that progressive politics will come at an economic cost is a powerful constraint on voting behaviour. It's Labour's misfortune that the global financial crisis, for which the party was no more to blame than any other, has added a recent brutal experience of economic crisis on its watch. Wealthy right-wingers use the print media to stoke fears that a vote for Labour will wreck the timid recovery, although what they are really worried about is the Mansion Tax and Labour's plans to abolish Non-Dom status.
The more positive news about this election is that whatever the outcome the Conservatives, the party of reference for the wealthy, is likely to poll way below its historical average. Even optimistic forecasts put the party on 35% of the vote, which could be enough to make it the largest party, but is a good 10% or so below the levels achieved by Margaret Thatcher and John Major. All of the rest of the electorate, with the exception of a portion of the Liberal Democrats (expected to get below 10% of the vote), is likely to support parties that in one way or another reject the Conservative message. Even UKIP, despite its neoliberal leanings, is not a truly plutocratic party, and its curbs on immigration and resentment of Europe's common market are in conflict with the interests of most of the UK capitalist class.
Given the workings of the electoral system, a progressive majority around Labour, the SNP, Plaid Cymru and the Greens (and maybe some progressive Liberal Democrats?) appears possible. The end of the two-party system in Britain is a big threat to the blackmail power of the wealthy: PR systems in continental Europe don't generally produce the kind of hysterical propaganda and stark choices between order and chaos that we see here. A reform of our antiquated electoral system could open up a different kind of politics (although not without risks: UKIP would win a substantial number of seats). PR and federalism make sense for a diverse and politically fragmented state like ours, and would undermine the narrative of 'vote for me or it will be chaos'.
Conservative political strategy appears to be implacably hostile to these kinds of changes, even though the Alternative Vote electoral reform they opposed in 2011 would, it seems, have placed them in a much better position in this election, as the second choice of many UKIP voters. Moreover, federalism would likely reduce the influence of Scotland, Wales and Northern Ireland, where the Conservatives have few seats, over policy in England, where the Tories usually dominate. Yet the Conservatives struggle to cope with the idea of power-sharing, preferring to run the risk of opposition for the chance to govern unencumbered. Labour and the Liberal Democrats, as well as the Nationalists, are far more amenable to reform and the likely experience of a minority government could well force constitutional change back on to the agenda. But the loud voice of big money can be counted on to oppose it.