PLUNDERING THE POLITY

 Dick Pountain /Political Quarterly/ 13th May 2026 : 01:20pm

Book Review: The Asset Class: How Private Equity Turned Capitalism Against Itself, by Hettie O’Brien; Weidenfeld & Nicholson;‎ 9 April 2026; £25

If you’re currently feeling that the world is falling to pieces, that might be because it is. I’m writing this review on a day when the UK Labour Party is contemplating throwing away a 400+ majority on a foolhardy leadership contest: the US president is in China explaining his even-foolhardier war with Iran that threatens their oil supplies; and Silicon Valley AI moguls still seek to appropriate all the world’s electricity and water to support chatbots rather than people. Democracy appears to be coming apart at the seams as authoritarians, sociopaths (and a smattering of psychopaths) come to power in more countries via well-rigged ballot boxes. 

Belief in an unbreakable connection between democracy and capitalism, once propounded by free market zealots as the fleeting orthodoxy following the collapse of the Soviet Union, now appears close to unravelling completely. It turns out to have been neither moral nor inevitable but rather contingent and fragile, historically determined by specific circumstances that may never arise again. And the separation between democracy and capitalism seems to be headed in two equally catastrophic directions: to a weakened democracy with authoritarian plutocratic rule (USA), or to a weakened capitalism of stagnation and loss of innovation (UK, Russia). 

The story that we on the Centre Left have told ourselves (and anyone else who would listen) for the last 60 or so years has been of a post-WW2 settlement which saw what one might call either social democracy or managed capitalism prevail throughout the Western World – mixed economies and welfare states paid for by high, modestly-redistributive taxation. Following the oil crises of the 1970s and a rightward swing to the Thatcher and Reagan administrations, this Eden began to be eroded by neoliberalism – privatisation of public utilities, suppression of union power and market forces encroaching in every sector of society. But despite Margaret Thatcher’s denial of its existence, there was still such a thing as society, which neoliberal Right parties sought to rule via a reduced state and private industries invigorated by de-regulation. They were still playing a game of class-war and state power. 

Private Equity (PE from now on), the subject of Hettie O’Brien’s highly-readable if rather frightening new book, however deigns-not to play the game of politics at all. Exploiting new financial freedoms created by neoliberal governments, PE plunders whole economies, looking for weak firms to buy up using borrowed money, squeezes them dry, slashes and burns, then sells them on and pockets the profits for its owners. The ‘private’ in PE means exactly what it says – where neoliberalism was a programme for ruling via a (shrunken) state, PE is merely a programme for self-enrichment. Private Equity funds purchase ‘assets’, that is companies, using some of their owners’ own money and some from select external investors (who are promised return rates well above the market average) but overwhelmingly with loans that are charged to the asset company, then repaid during the process of stripping it. 

So long as loan-rates remain manageable, this acts as a tax efficient and highly lucrative investment vehicle, increasingly preferred over stock markets by individual billionaires (via what they call their ‘family offices’), by pension funds and by the sovereign wealth funds owned by monarchs and dictators.

Private Equity is by no means the only current threat to economic stability and the living standards of majority populations, which are equally threatened by the gargantuan fortunes accrued by monopolistic Silicon Valley corporations (from hardware, software or social media rents) using which they buy up the mainstream news and entertainment networks; by highly organised global tax evasion via Panama-Papers-style offshore havens; and by large-scale money laundering schemes, many involving crypto currencies. All these corrupted streams feed a sloshing ocean of funding that purchases political influence from populist governments. O’Brien’s book does an excellent job of explaining Private Equity as merely one of the beaks among this flock of vultures that is consuming welfare states the world over.  

Hettie O’Brien is a lead writer and editor at The Guardian, and was previously an editor at The New Statesman and so as you’d expect with such a CV she writes engagingly with a minimum of economics jargon or leftist rhetoric. Her account of PE begins basically with a history, tracing PEs descent from Nixon’s Treasury Secretary in the 1970s, William E. Simon, who thought that corporate bureaucrats were leading the US to communism, through those flamboyant asset-strippers of the Thatcher era Sir James Goldsmith and Jim Slater, and onward to the junk bond exploits of Michael Milken and his cronies in the 1980s. 

Arriving at the present day she organises the book as a sequence of case histories of funds like Blackstone and BlackRock, PFG, KKR, Macquarie and Nomura and their questionable exploits, which range from buying up Copenhagen’s housing stock, owning Kenyan hospitals that imprison patients until bills are paid, and taking over the UK’s water companies and care homes. O’Brien devotes whole chapters to such cases, naming names and deploying a journalistic skill for telling detail – the clothes, cars, restaurants that situate the actors in their milieux.

She explains the changes to taxation of profits introduced by UK and US governments that have made PE so profitable, in particular a loophole called ‘carried interest’ which permits a PE fund’s managers to extract 20% of any increase in an asset’s value on top of the 2% fee they already charge to the other investors. PE has, and still does, enjoyed the complicity of governments keen to offload public services, and as a result it began moving away from purchase of industrial firms, which are riskily exposed to market competition and resource inflation, toward essential public service assets like water, energy, transport, prisons, care and medicine which have captive ‘customer’ bases. This shift is responsible for a rapid deterioration in the quality of such services, as costs and payrolls are trimmed, alongside an increase in public debt, fiscal tightening and austerity - what O'Brien calls “rewiring the state in service of a wealthy elite”.

So PE is a machine for generating (and maintaining) billionaires, just so long as interest rates on the loans required to ‘leverage’ those buyouts remain low. Once interest rates go too high, such extreme leverage becomes lethal and results in collapse, although by that time fund managers will have taken their payoff. Rates are currently rising in the wake of Ukraine and Iran War oil-shocks and signs of desperation are appearing in the PE sector, including innovations like NAV (Next Asset Value) loans that leverage the value of a fund's whole portfolio rather than its individual companies, and PIK (Payment In Kind) loans which defer interest and add it to the principal, hence going deeper into the red. The PE industry has also devised another escape route through ‘democratisation’, persuading governments to let in ordinary retail investors who are normally barred from investing in such secretive vehicles.  

I especially enjoyed O’Brien’s Chapter 9 on short-selling, the trick employed by PE outfits to buy companies on the cheap by betting on their stock price falling (I’ve long been an addict of the BBC’s ‘Industry’ drama series with all its sex, snorting and shorting). In her final Chapter 10, O’Brien arrives at our current chaos. Having already charted the way Private Equity cosies-up to governments of all political persuasions by offering to take public services off their hands in return for lax taxation, she finally arrives at the apocalypse of Donald Trump’s 2nd term: 

“An observer could have been forgiven for guessing that Trump and Musk were trying to destroy the state entirely. Viewed another way, however, their hatred of bureaucracy seemed more like an attempt to revive the age of male sovereignty, both in politics and the boardroom. They were harnessing the power of government in the interests of a small group of ultra-wealthy company owners, founders, fund managers and billionaires.” 

In other words, PE now rules: The Trump Organisation is in effect a PE family office. For how long it will rule is a matter for fevered conjecture, since many economists, and not only from the Left, believe runaway interest rates, when combined with the circular-finance shenanigans of the AI corporations, may trigger a recession or financial collapse of 2008 proportions. 

I’d recommend anyone who’s trying to understand our present predicament to read ‘The Assert Class’, and that’s not such a dreary chore as many economic tracts impose, thanks to Hettie O’Brien’s lively style. Don’t however expect O’Brien to offer any major solutions to the threat posed by Private Equity. Those who’ve read Thomas Piketty will appreciate the unprecedentedly radical solutions – steeply progressive taxation that re-distributes both wealth and income, transparent international business registration, industrial democracy – that this would require, and they’ll also understand that no-one, not Piketty nor O’Brien nor anyone else, yet knows how the political will to achieve these measures could be assembled. If it’s not, these tiny billionaire classes will continue to secede from mainstream society, plundering as they go, and ushering in a very far from brave new world…

 Dick Pountain, London 2026