26 October 2022

The fall of Liz Truss will not bring calm but rather a new period of conflict

The Conservatives know they have no solution for Britain’s worsening crises and yearn for release from the burden of power.

By John Gray

Illustration by Nate Kitch

A quiet satisfaction can be detected in the high liberal centre of British politics. With the implosion of Liz Truss’s experiment in debt-financed libertarianism, Britain can at last have the grown-up government it has for so long missed. Once the newly crowned Rishi Sunak and his Chancellor-designate Jeremy Hunt are safely installed in Downing Street, febrile ideology will be replaced by sober competence. When the Conservatives go to the polls in January 2025 (if not before), they will be succeeded by a Labour Party that promises prudence and stability. The recurring nightmare in which the centre cannot hold, which has haunted liberals since the Brexit referendum in 2016, will be finally exorcised.

Against the backdrop of the chaos of past weeks and months, this is for many a reassuring vision. It is also wishful thinking. It is more than doubtful that Conservatives can survive in office for another two years. Ungovernable themselves, they have ceased to be a viable party of government and yearn for release from the burden of power. Dread of sudden extinction at the polls impels them to hang on in Westminster, but the contortions of the leadership election were gruesome twitches in a moribund body.

The historic role of the Conservatives in British politics is almost certainly over. For generations it dominated by accommodating a broad spectrum of ideas in changing coalitions that reflected the country it ruled. Today it is a theatre of rancorous warfare and spent ideologies.

But Labour, too, will struggle to survive a full term in office. The fiscal orthodoxy to which it is committed will be deeply unsettling for voters and destabilising for the party itself. Spending cuts and freezes will mean lower real incomes for millions of public sector workers and strikes will continue and spread, while the semblance of unity Starmer has imposed on the party will begin to crack. As the Tories have demonstrated, a huge majority does not preclude chaos in government. Confronted with multiplying crises, a Labour landslide could soon be followed by immobility and powerlessness.

The stark fact is that Britain is drifting into a state of chronic emergency. Starting this winter, living standards will fall for most of the population. With Putin’s war of terror in Ukraine escalating, energy prices will remain high, and infrastructure in this and other European countries may come under attack. Announced along with an accelerating military build-up at the opening of the Chinese Communist Party’s 20th National Congress in Beijing on 16 October, Xi Jinping’s decision to double down on zero Covid will hobble Chinese industry and strengthen recessionary forces throughout the world.

These are not the only challenges. The turmoil that followed Kwasi Kwarteng’s mini-Budget revealed fragilities in Britain’s pension schemes that run throughout the global financial system. Liberal capitalism has been floating on a tide of funny money ever since Long-Term Capital Management, a comically named hedge fund that used financial engineering to generate profit, blew up in 1998 after Russia defaulted on its sovereign debt.

Fallout from the collapse threatened a global crisis, which was avoided by a bailout that set the precedent for electronic money-printing (otherwise known as quantitative easing) after the crash of 2008. Nothing was learned, and the market continued to devise opaque and risky products affecting trillions of dollars of assets. The rise in asset values that followed was inherently unsustainable, and a larger re-run of the crash is not unlikely in the near future. Any policy programme that depends on a steady trajectory of economic growth will be stymied before it has begun.

If there is a bright side to the present situation, it is that the free-market ideology that inspired Truss’s mad dash for growth will be banished from government for at least a generation. Contrary to those of us who believed her will to power might triumph over her avowed beliefs, Truss was a convinced market fundamentalist who surrounded herself with fellow true believers. The result was a project that had virtually no support beyond her circle.

It has been said with some justice that polling a small group of ageing Tories is an odd way of choosing a prime minister. (The ill-judged 1998 rule change under which party members were given a vote was the work of William Hague, who has since taken on the mantle of elder statesman.) But not many of the constituency members who elected the former prime minister can have shared the world-view she paraded at the party conference. Conservatism has never been a fixed ideology. But what conservatism is not is clear enough, and Truss’s libertarianism was always an unconservative creed.

In the Eighties, the conflict between market liberalism and conservatism was openly and proudly acknowledged in free-market think tanks such as the Institute of Economics Affairs, where nothing was more despised than the weak-kneed caution of the Tory trimmer. Here, the think tanks had the backing of their intellectual godfather. In “Why I Am Not a Conservative”, a celebrated postscript to his treatise The Constitution of Liberty (1960), Friedrich Hayek denounced conservatives for their unprincipled embrace of politics as the art of the possible and their irrational reverence for the past. The overriding imperative was continuing progress – “the cumulative growth of knowledge and power over nature”. He acknowledged that “this does not mean we shall like all its results or that all will be gainers”. Many would be unhappy, but that did not matter: “What matters is the successful striving for what at each moment seems attainable… Progress is movement for movement’s sake.” If sections of humanity have to be left behind in the unending march, so be it.

During most of Thatcher’s time in power, libertarian ideology was curbed by her attachment to the British tradition of parliamentary government and her instinctive political nous. The right-wing think tanks shaped policy directly only with the adoption of the poll tax, introduced in Scotland in 1989 and in England and Wales the following year, and it was then that Thatcher was forced out. Truss’s abortive free-market experiment was a stilted plagiarism of Thatcherism, without any of Thatcher’s ambiguities or Hayek’s sense of the emptiness of material progress.

Truss’s debacle is severely damaging for the libertarian right, but the centrists who rejoice in her downfall have not renounced the cult of the market. Their unspoken dream is a technocratic government of experts through which liberal capitalism can be insulated from democratic politics. The model for this kind of governance is Italy, with Sunak a British version of the former banker Mario Draghi, who resigned in July this year after the collapse of his unity government, after serving as unelected prime minister for 20 months (the post-fascist Giorgia Meloni won the ensuing election).

It is unlikely that Sunak will last as long. If pensions and welfare benefits are not uprated in line with inflation, millions of households will be pushed into poverty. When the energy cap expires in April of next year, many of them will be at risk of destitution. Hunt, the new Chancellor, has talked vaguely of targeting aid to the worst off, but it is hard to conceive how the Tories could be re-elected in such conditions.

The new Tory centrism is being welcomed as a return to reality. But how realistic is rule by the bond market, when it means ruin and despair for so much of the population?

A Starmer government is a likely outcome whatever Sunak and Hunt may do, but there is no sign of the radical programme Labour needs to prevail in challenging circumstances. Aside from criticisms of Tory misrule, the party has little to offer. An Osbornist regime of austerity veneered over by fashionable chatter about a Green New Deal will do nothing to rebuild the Red Wall.

Starmer would be well advised to ponder the GMB general secretary Gary Smith’s September interview with the New Statesman’s Rachel Wearmouth. Smith’s warning against shutting down nuclear power stations and promising displaced workers jobs in renewable energy that don’t exist is particularly compelling. Working-class people are as concerned with climate change as anyone else, but they will not support programmes in which they suffer the most as a result of what the GMB leader aptly describes as “bourgeois environmentalism”. The revolt of the French gilets jaunes from 2018 and Donald Trump’s mobilisation of the US’s abandoned deplorables are a warning to Labour, but one this now ineffably bourgeois party is unlikely to heed.

The Green New Deal is like Truss’s dash for growth: an illusion. As the global economy deteriorates and fragments, the real task will be averting mass impoverishment and a breakdown in social order. Public utilities and much of the energy industry will have to be nationalised. Ruinously costly anachronisms including the HS2 railway line must be scrapped. Renovating the state and using its resources to develop technologies such as hydrogen and small modular nuclear reactors will be urgent priorities.

Instead, research and development will likely be among the first areas of spending to be cut under a new regime of austerity. National defence and justice will be defunded at a time of mounting danger. The NHS will be left unreformed and starved of resources. Britain will continue its decline into pauperdom and disorder.

Whichever of them is in government, none of the main parties can steer the country through the privations that lie ahead. In these circumstances proportional representation is not the distraction it has been in the past but an unavoidable necessity. The centrist consensus is an obstacle to understanding the present and shaping any humanly tolerable future.

Britain needs a Conservative Party that prizes social cohesion over economic expansion, a non-Corbynite party of the left that rejects liberal capitalism and a Green Party that breaks with the bankrupt agenda of bourgeois environmentalism. The reborn SDP and Blue Labour deserve a much wider hearing. We may even need a libertarian party, though it will surely be small and marginal.

There are risks in moving to proportional representation. In continental Europe and Israel, it has enfranchised extremist minorities. But the belief that market forces cannot be allowed to wreck society is not an extreme or minority position. If the British majority have a common view of things, this is it.

One of the benefits of electoral reform would be to put the Conservatives out of their misery. Boris Johnson’s apparent attempt to resume his role as political clown-in-chief petered out because his record of lies and his divisive personality were recognised to be potentially fatal for the party. But a death wish animates the Conservatives today, and it will not go away once Johnson has slunk back to the lucrative American lecture circuit. He will remain a shapeshifting trickster, offering new life to a party that yearns to die but lacks the capacity for agency that is required for suicide. Proportional representation will give the Tories what they secretly desire, a peaceful euthanasia.

The Conservatives know they have no solution for Britain’s worsening crises. Labour has yet to realise it has no answers either, but it will quickly find out once it is in power. Rather than being the prelude to an era of centrist government, Truss’s downfall will be remembered as the beginning of the end.