On May 15th, a one-day conference will be convened by the Progressive Economy Forum in SOAS, entitled Progressive Economics in the Age of Trump. Distinguished economists with diverse opinions will discuss the implications of Trump’s actions, assess the changing nature of capitalism, the stranglehold of finance over the British economy and policymaking, and the scope for progressive fiscal and social protection reforms. It is open to anybody who wishes to contribute. The context could scarcely be more alarming.
In a poll in April, only half of those who voted for Labour in 2024 felt able to say they knew what Labour stood for. In the Telegraph, the Prime Minister said Labour is “creating wealth in every corner and delivering security for everyone, everywhere.” Really? The conference will consider how it could do better. Indeed, the only glimmer of hope emanating from Trump’s actions is that they might break the mould that has been intensifying insecurity for much of Britain’s population for far too long.
In the long evolution of capitalism, its progressive opponents (‘the left’) have only had transformative success when articulating a vision and strategy around the emerging mass working class. For much of the 20th century, that was the proletariat, industrial workers in relatively stable manual jobs.
But since the onset of de-industrialisation and the neoliberal economics revolution of the 1970s and 1980s, the left has floundered, alternating between trying to resurrect old-style social democracy and compromising with neoliberalism as with the Third Way, devised in the 1990s by Wim Kok of the Netherlands and adopted by Bill Clinton, Tony Blair, Gerhard Schroder and left-of-centre political parties. A key feature of the Third Way was a rejection of class-based politics, as stated by its intellectual guru Anthony Giddens.
The most one can say about the Third Way is that it enabled social democrats to be occasionally in office but not in power while the neoliberal political right replenished itself or recovered from mistakes, infighting or fragmentation.
Meanwhile, capitalism changed. It is vital to recall how, and how it has created a new class structure that should inform progressive politics. A starting point is Karl Polanyi’s The Great Transformation, published in 1944. His thesis was that capitalism evolves through crises. An old social order breaks down and a ‘dis-embedded phase’ begins with a lurch to laissez-faire, a free market system dominated by finance (in his words, merchant capital). In that phase, the state dismantles old systems of regulation, redistribution and social protection, which had moderated inequalities and insecurities. The dismantling leads to unsustainable inequalities and insecurities, until a crisis occurs in which “there is the threat of the annihilation of civilisation”.
At that point, there is either a lurch to fascism or a “double movement” in which the economy is re-embedded in society, with new systems of regulation, redistribution and social protection. A point only vaguely in Polanyi’s dialectical analysis is that, to succeed, the double movement must be a response to the insecurities, needs and aspirations of the emerging mass class.
After the Second World War, the “re-embeddedness” was social democratic, based on the needs and aspirations of the proletariat, with protective labour regulations, progressive income tax and labour-based social security. It was a class alliance, between the professional salariat and proletariat. That fizzled out in the 1970s, giving way to the neoliberal economics revolution of the Mont Pelerin Society, put into effect by Thatcher and Reagan in the 1980s. This took the world into the “dis-embedded” phase of the Global Transformation, the protracted construction of a globalised economic system. Those who dominated it preached ‘free markets’ and ‘deregulation’. But they actually produced a triumph of private property rights over market forces, best described as rentier capitalism.
The key developments were domination by finance and a vast strengthening of intellectual property rights, mainly by the US Bayh-Dole Act of 1980, which allowed federally funded research to be converted into corporate private property, and TRIPS in 1994, which globalised the US intellectual property rights regime. It was aided by neo-mercantilist fiscal policy, providing vast subsidies to wealthy corporations and individuals, who used their wealth to invest in financial markets, largely in hedge funds and private equity.
This led to conglomeration in most sectors; corporate giants took advantage of economies of scale and of scope, enabling them to raise mark-ups of prices over production costs. Helpful to this was the weakening of anti-trust legislation and regulators, due to a rationalisation that in a free market economy there was no need to worry about monopolies, since they would be temporary until competitors whittled away monopoly profits. The intellectual property rights regime mocked that presumption. Today, there are over 16 million patents in force, each one giving their owners a guaranteed monopoly for 20 years. That is not a free market.
The most relevant features of the resultant rentier capitalism are fourfold. First, labour costs shaped international trade and production, putting downward pressure on wages in rich countries. Second, there was a remorseless shift of income and wealth to forms of rent; the share of income going to those performing labour has shrunk, the share going to owners of financial, physical and intellectual property has jumped. Third, all countries pursued ‘labour market flexibility’ policies as a competitive device. Fourth, governments reacted to financial crises by pursuing ‘austerity’, cutting social spending to offset tax cuts designed to make their economy more attractive for investors.
An outcome was a new globalised class structure, in which a plutocracy has gained incredible wealth and power, while the new working class is the precariat. The social democratic left failed to curb the plutocracy – indeed, they pandered to it – and failed to understand or respond to the needs and aspirations of the precariat. Tragically, the left today is paying a heavy price for that twin failure.
The right has understood rather better. I can illustrate that by relating a personal experience. Bizarrely, in early 2016 I was invited by the Bilderberg Group to speak on the precariat at their annual secret meeting, which that year was held in a palace hotel in Dresden. They wanted me to talk about my book, The Precariat: The New Dangerous Class, which has been translated into 24 languages.
I found myself addressing Henry Kissinger and about 100 figures of the western right-wing elite. I predicted that part of the precariat would vote for Brexit and for Donald Trump later that year. I expected a hostile reception, but to my surprise, there was a lot of interest, and several people asked to have private conversations afterwards, including Senator Lindsey Graham, a Trump supporter. The meeting operated under the Chatham House rule, and I should respect that in not revealing what was said.
However, during most of the three-day meeting, I shared a table with Peter Theil, multi-billionaire co-founder of Paypal, then the leading funder of Trump, and in 2024 to be the promoter of Vance as Vice-President. There is a good case for saying that Theil has been the single biggest influence on Trump’s policies.
In 2009, Theil wrote an article, “The education of a libertarian”, in which he said democracy was incompatible with freedom, citing welfare beneficiaries and women in general as likely to vote for redistribution and public services, so in his view impeding wealth makers. He also wrote that “competition is for losers”, which is why he favoured monopolies. He was anti-free trade, advocated a dismantling of the federal bureaucracy, and for good measure, opposed multiculturalism in universities and all forms of ‘affirmative action’.
In 2025, Theil and his friend Elon Musk are shaping Trump’s authoritarian policies that are driving the world into another dark night with fascistic characteristics. But the point I want to make is that many at that meeting understood the precariat better than the mainstream left has done before or since.
Too many commentators use the terms ‘working class’, ‘middle class’ and ‘upper class’ without making any attempt to define what they mean. A class should be defined in three dimensions. The first is its ‘relations of production’, or in plain English, the pattern of work and labour. The norm for the precariat is unstable, insecure labour coupled with a lot of work-for-labour and work-for-the-state that are ignored in official statistics. Much of it could be reduced, but policymakers ignore it. The precariat mostly lacks an occupational narrative. And it is the first class in history in which the modal level of education is above the level of labour they are likely to obtain. The left should respond to those characteristics empathetically, not resort to old ‘active labour market policy’ and welfare cuts.
The second dimension is distinctive ‘relations of distribution’, that is, forms of income. Again, the left has ignored the reality, typically thinking that raising the minimum wage will have a big effect. While welcome, it has limited relevance for the precariat. It experiences volatile, uncertain money wages while being deprived of non-wage benefits, probably accelerated by rises in the minimum wage. The precariat is also mired in debt, which is integral to rentier capitalism. And it is penalised by the state benefit system, abominably so by Universal Credit. A chilling fact is that over a third of all those in jobs rely on state benefits to achieve subsistence. And the left has cut them.
The third dimension is actually the most important and least recognised by the commentariat and politicians. This is ‘the relations to the state’. The precariat is the first mass class to lose rights of citizenship, that is, les droits acquis. This applies not only to migrants. The precariat is losing civil, social, economic and cultural rights. And it feels it has no political rights, because no party represents its interests and aspirations.
This leads to my final remarks. The precariat is still a ‘class in the making’, in that it is internally divided. As elaborated elsewhere, it is split into Atavists (mostly the less educated who believe that Yesterday was better than Today and that it can be brought back), Nostalgics (those without a Present, mainly migrants) and Progressives (those who feel they have lost a Future).
Those in that Bilderberg Group meeting understood that their strategy should involve an alliance between the plutocracy and the Atavists in the precariat, demonising and disenfranchising the Nostalgics, while knowing the mainstream left was not appealing to any part of the precariat. The mainstream left fell into the trap, alienating the Nostalgics by moving some way towards the right, alienating the Atavists by not moving enough, and failing to appeal to the Progressives by not offering a better Future
That explains what happened last year and what could continue unless the left changes. The Democrats lost to Trump not because he was hugely popular but because well over a third of the electorate did not vote. Trump received the support of under a third of the electorate. In the UK, faced by a worn-out, chaotic, corrupt Tory government Labour received the support of just 19% of the electorate, with fewer votes than under Jeremy Corbyn in 2019. Now half of those who did vote for it do not know what it stands for.
In sum, the left is paying a heavy price for ignoring the precariat. But it is just conceivable that Trump’s shenanigans could prompt real change. The far right is hoping ‘the left’ will continue doing just the same. The situation brings to mind Tom Paine’s clarion call in a moment of despair: “These are the times that try men’s souls.”
Thursday, May 15th
Progressive Economics 2025, UK Economic Policy in the Age of Trump. Register here.
Guy Standing is Professorial Research Associate, SOAS, University of London, and co-president of BIEN, the Basic Income Earth Network.
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