If there is an organisation in the UK most associated with free-market ideology, the brand of right-wing economics championed by Liz Truss during her ill-fated premiership, it is the Institute of Economic Affairs (IEA). Based in a Georgian townhouse in the heart of Westminster, a stone’s throw from parliament, the think tank’s stated aim as an educational charity is “to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems”. What that means in practice is making the case – in reports, to politicians and in the media – for low taxes, public spending restraint, light-touch regulation and a smaller state. One can think of the IEA, founded in 1955, as, if not the birthplace of Trussonomics, then the nursery which cultivated it to the point where it became government policy.
“There’s this idea that we are the sort of illuminati puppet masters of the world who are secretly orchestrating this neoliberal capitalist regime from behind the scenes. I mean, I’m tempted to say ‘if only!’ ” Mark Littlewood cheerfully tells me. “I find it, in some ways, bizarrely flattering.”
Littlewood, 51, has been director-general of the IEA since December 2009. He has the air of a displaced academic (perhaps it’s the waistcoats, or how if you encounter him wandering around Westminster he always seems ready to burst into a debate about the merits of Hayekian spontaneous order). He has been a stalwart of the right-wing think tank scene for so long (his long-term partner also worked at the IEA until recently) that it is difficult to imagine it without him. But after 14 years at the helm, during which time he worked closely with Truss and was a key influence on the free-market Tories in parliament, he announced in August that he would be standing down as head of the IEA next year. The think tank is yet to announce his successor.
The free-market movement has suffered a serious blow. Truss and Kwasi Kwarteng’s six-week experiment proved disastrous: the mini-Budget, which included abolishing the top rate of tax on earnings over £150,000, triggered a market panic and was estimated by the Resolution Foundation to have cost the UK economy £30bn. (That figure has since been disputed, while Truss herself has argued that public spending would have been £35bn lower had she been given the chance to enact her plans fully.) The notion that slashing taxes is a viable way to grow the economy and increase prosperity for all seemed utterly discredited.
“The climate has shifted against us,” Littlewood agrees. “It won’t surprise you to learn that I don’t take full responsibility and culpability for that being the case. But I recognise it is the case.”
Like the former prime minister, Littlewood is full of explanations for why the radical free-market agenda he promoted for so much of his career failed to have the desired effects when actually attempted. While he gives Truss “10 out of 10 for diagnosis”, her sequencing was misguided, he says, referring to the decision (which Kwarteng has also said he regrets) to announce tax cuts without corresponding spending reforms. But Littlewood also singles out the institutions – the Office for Budget Responsibility (“who you would think were almost the referees of the economic debate in the United Kingdom”), the civil service, the Bank of England – that, he argues, make challenging economic orthodoxy almost impossible, regardless of whether that challenge is coming from the right (Truss) or the left (the Corbynites). “If you want to see dramatic and radical reforms of the structure of the UK economy, there are some very major institutional barriers.”
“I wonder whether there is a parallel universe in which she could have succeeded,” Littlewood muses, “or whether the odds were so stacked against her it was just a question of whether it blew up in 50 days or 100 days.” The Truss premiership lasted 49.
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Though its operating budget is low at around £2.3m a year (“We’re dwarfed by Oxfam and Greenpeace”) the IEA has an outsized voice in public debate. Its spokespeople regularly appear on Politics Live and Question Time and in the comment pages of national newspapers making arguments – opposing sugar taxes and green initiatives, defending vaping companies, ruthlessly pushing NHS reform – that are often at odds with public opinion. Littlewood estimates the price of that influence at £60m: “That’s to say if you had to buy that airtime and those column inches on the open market through an advertising agency, that’s roughly what it would cost you.”
With great influence comes great controversy. The IEA refuses to disclose its sources of funding, but has in the past received donations from oil giants, tobacco companies and the alcohol industry, among others. Its lack of transparency has led left-wing commentators such as Owen Jones and George Monbiot to argue it should be no-platformed. Littlewood brushes off the criticism.
“This attempt to make us into cartoon villains is playing the man, not the ball. It’s part of cancel culture really – it’s a convenient way of excluding somebody from the argument. ‘Oh we’re not going to hear from Mark Littlewood because he doesn’t reveal who funds the Institute of Economic Affairs.’ I suspect really, subconsciously, ‘we’re not going to hear from Mark Littlewood because we don’t like his opinions’ is what’s going on.”
And does he worry that people don’t like his opinions? Free-market ideas have rarely been widely loved, and after the Truss debacle, the popular case for lower taxes is weaker than ever. The recent British Social Attitudes survey found that 55 per cent of voters favour higher taxes and higher public spending, compared to just 8 per cent who favour lower taxes and lower spending.
“I’m not trying to handwave away your question, but my theory is this: that in very broad terms, socialism is popular in contemplation but disastrously unpopular in effect. And free-market capitalism is unpopular in contemplation, but very popular in effect.” Has Truss damaged the cause for a generation? “An awful lot can change in a ten-year span.”
To say Littlewood has been on a political journey is an understatement. The IEA has long been associated with the most avidly right-wing, Brexiteer faction of the Tory party, but he did not grow up a Conservative. (In fact, he stresses that he is not a member of any political party and reminds me that the IEA is strictly non-partisan – although its critics would disagree.) As a student of philosophy, politics and economics at Balliol College, Oxford, in the 1990s he was involved with the Liberal Democrats (along with Truss, who is three years his junior), and was the party’s chief press spokesman in the early 2000s. He was also a passionate Europhile, leading the Young European Federalists in his twenties and working for the European Movement. But he voted Leave in 2016. What changed?
“It’s not been a change of principle, it was entirely an empirical discussion.” In the 1990s Littlewood believed the EU was “going to smash down barriers, make it easier to trade”. More recently, “the attention’s been on things like what is the maximum acceptable suction power of a vacuum cleaner or when does the standby button on a television set need to kick in”. In other words, he didn’t change; the EU did.
In fact, Littlewood claims there’s been “quite a staggering amount of consistency” in the way both he and Truss have developed their political ideas, starting from the principles of civil liberties. “What would have attracted you to the Liberal Democrats in the 1990s would have been scepticism of the establishment, opposition to vested interests, possibly a belief that the constitutional infrastructure of the United Kingdom was wrong.” Over the last 30 years, the parties have shifted, with the Lib Dems becoming more interventionist, and the Tories becoming more progressive on social issues such as LGBT rights. “So if you believe people should be able to live their lives as they see fit, as long as they don’t incur harm to others, that wouldn’t have naturally sat within the Conservative Party in the 1990s but probably does sit as the general median position of a member of the Conservative Party in the 2020s.”
When I ask Littlewood what’s next after his long spell in think tank land, he hesitates. He doesn’t mention the House of Lords (he is tipped for a peerage if Truss gets her honours list) or standing as a parliamentary candidate. Instead, he tells me he’s writing a book. About the economic case for low taxes? “I definitely didn’t want to do something unbelievably predictable!” he laughs. No, the book is about “the deep allegorical, philosophical and political meaning of the first 23 movies in the Marvel Cinematic Universe”.
Iron Man, Littlewood argues, with the enthusiastic glint in his eye of a true fan, is “a free-market arms dealer” who gets “harried unnecessarily or screwed around by government forces who are a mixture of incompetent and corrupt”. Captain America: Civil War poses the moral quandary “should we regulate superheroes?” And Thanos, the super-villain of the Infinity Saga, who attempts mass population control across the universe due to resource scarcity, is “essentially a very large purple version of Greta Thunberg”.
“I believe it to be the great libertarian tale of our times,” he says. Who knows, if Liz Truss had put it that way, perhaps she would still be prime minister.
[See also: The return of the free-market right]