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Britain’s recovery industry: profiting from austerity?

While government spending cuts continue to grab headlines, private companies are quietly making money from the psychological hardships generated by austerity.

Emma Dowling
24 June 2015

This is the fourth in a series of ten articles on the theme of rethinking recovery.

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A "Farewell A4e" party in Brixton. Flickr/Boycott Workfare. Some rights reserved.

In the wake of the global financial crisis, Britain has undergone significant restructuring, most visible in the extensive austerity measures supposedly geared towards enabling economic recovery.

To “recover” means to “come back” or “return”. In medical terms, recovery means regaining health after an illness, such that any temporary measures put in place to manage a crisis can be lifted and a previous way of life can be resumed.

When applied to the economy, recovery is conventionally considered synonymous with a return to the status quo ante: putting economic growth back on track. However, this requires new sources of profitability, achieved through regressive forms of redistribution and the creation of new markets.

Political economic trends associated with austerity are commonly spoken about as forms of “restructuring”. Analysts have tended to focus on what is being lost in this restructuring – namely, welfare spending that is essential for many in Britain. This makes good sense, since prevalent in the British government’s rhetoric of recovery is the need significantly to reduce its spending, ushering in the most profound cuts to welfare budgets the country has ever experienced.

But less attention has been focused on what is being “gained”, and by whom. After all, isn’t austerity fundamentally an attempt to cultivate new forms and spheres of profitability and financial return? And, if so, has “recovery” become an industry in contemporary Britain?

The “shrinking” of the state has given way to the dramatic outsourcing of local council services to multinational corporations, as well as endeavours to foster the expansion of mutual funds, social enterprises and new community business models to privatise previously public assets or take over libraries, swimming pools or community centres otherwise befallen by cuts.

Despite the keen emphasis on social value and local, community-orientated solutions, privatisation logics are driving this new market for social investment and, as such, underlie the deepening profitability of firms and upward redistributions of wealth.

A panacea for social problems

Key to the “recovery industry” is a restructuring of the British labour market, especially its bottom end. For instance, the new market for social investment is linked to the development of an apparatus to enhance the productivity of labour, with many of the projects funded by social investment geared towards improving employability, especially of young people.

Indeed, it’s remarkable just how many social investment projects focus on employment and employability. Work appears to be being considered a panacea for all kinds of social problems, reinforcing the idea that it is the most important social activity, and thus inherently conducive to personal wellbeing, not simply a means to an income.

These initiatives sit alongside calls to “spin out” and privatise employment services and job-centres in order to harness the supposed benefits of competition. They also complement the expansion of welfare-to-work schemes. It is here that we find the dark underbelly of recovery: namely, the coercion of people into work, despite having a disability or being otherwise unable to perform the labour that is newly being required of them.

In addition, welfare-to-work schemes have been reported to be imposing unpaid labour as a condition for receiving benefits. This regime also has a psychological dimension, with recent research pointing to the way it calls on people to display a positive attitude to work – even when that work is degrading – while at the same time producing feelings of shame or inadequacy at not being the “right” kind of person for recovery.

Private companies are heavily involved in providing different aspects of these services, for example in conducting evaluations of people’s mental and physical conditions and fitness for work. Critics and campaigners have questioned both the ethics and effectiveness of their practices, but less attention has been focused on the dynamics of profit that surround them. In effect, companies are profiting from the anxieties and psychological hardships generated by austerity.

These are just some of the ways in which we can identify what increasingly appears to be a “recovery industry” in Britain. It enlists private companies in manufacturing the conditions for economic recovery. It is focused on identifying and implementing “cost” and “efficiency” savings in the public sector, as well as enhancing productivity and creating new opportunities for financial investment. In so doing, it renders the restructuring of society productive.

Private companies profit from a deepening of poverty and inequality. Overall, we are witnessing the further embedding of classic capitalist disciplinary logics, such as productivity, profit and competition, into the fabric of society.

Offloading the cost of care

As has been widely documented, including on SPERI Comment, the austerity measures that have been implemented post-crisis offload more of the cost of care from the state on to individuals, households and communities. This has an effect on how people think of themselves and of others and how they seek to act in the world. Along with existing demands for ever-more entrepreneurial acumen in all aspects of people’s lives, austerity measures serve to convince individuals that the only person they can really rely on is themselves, supported at best by their family or local community.

What’s more, recovery is always routed through markets, commodities and business models: the lack of public funds resulting from austerity itself creates the void that is then filled by companies and financial investors.

At what cost to society is this happening? The introductory post in this series questioned the extent to which we are witnessing economic recovery, even on its own terms. Elsewhere too, it has been pointed out that quantitative measures of recovery in the British labour market vastly underplay just how many jobs are in fact extremely precarious and very low-paid.

A closer look at Britain’s “recovery industry” also suggests that the ways in which people are being put to work to generate the conditions for a recovery will serve them less well than the minority who benefit from the status quo.

All of these observations call into question what is meant by recovery, for whom it has meaning and on what terms. They also trouble the notions of progress and equity that are always implied in dominant narratives of recovery, making evident the need not for recovery per se, but for real economic and social change.

 

This article originally appeared on SPERI Comment, the Sheffield Political Economy Research Institute blog. You can read more from this series here.

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