The loss of Boris Johnson’s first chancellor of the exchequer had many journalists reaching for the loss of Margaret Thatcher’s second, Nigel Lawson. The departure of Lawson was a blow from which Thatcher never fully recovered and she was out of office 13 months later. But there is a fascinating point of dissonance: Lawson resigned because he felt that the breakdown of relations between him and Thatcher, who had come to rely heavily on her economic adviser, Alan Walters, made it impossible to run economic policy. “The conduct of successful economic policy is possible only if there is, and is seen to be, full agreement between the prime minister and the chancellor of the exchequer,” Lawson told Thatcher in his resignation statement.
You can see the parallels: Lawson quit because of differences between himself and Thatcher’s chief economic adviser, and Javid fell out with Dominic Cummings, Boris Johnson’s chief strategic adviser. But more importantly, Javid is making the reverse argument to Lawson: that far from depending on “full agreement” between the prime minister and the chancellor, without the ability for robust challenge between them, you end up with bad economic policy.
Who’s right? Well, we don’t know: we’ve never had an organisational structure like the one we now have at the top of government. You can cherrypick your historical counterfactuals to make whatever case you want: had Tony Blair had this structure in place in 1997, the United Kingdom would likely be in the Euro now. However, had Thatcher had this structure in place in 1987, the United Kingdom would never have entered the Exchange Rate Mechanism. The more important thing is that we will end up with different economic policy.
The bigger worry is that, ultimately, there is no Alan Walters analogue in this Downing Street set-up. Walters was a qualified statistician and economist with a 30-year career in academia when he arrived in Downing Street, and one of the first converts to monetarism. There is no equivalent figure of weight in Johnson’s Downing Street. Cummings, the adviser who Javid fell out with, enjoys his position due to his effectiveness as an electoral strategist.
Some civil servants, including those who broadly share the analysis that Cummings lay out in his blog, believe that this means that, ultimately, no matter how many organisational changes Downing Street embarks on, the Treasury will prevail. “The reason why Rishi is a good appointment is the same problem the overall endeavour has,” one official told me, “Rishi knows enough to know when he’s been bulllshitted. A lot of people seem to think that just being unpleasant and using Dom as a sort of bogeyman [to scare civil servants] is enough to drive change through.”
Monetarism, too, was based on a new way of understanding the economy – “Johnsonism” is a political project that has become an economic project almost by coincidence. There isn’t a new understanding of how our economy works that underpins it: there’s just the political calculation that voters like public spending and dislike tax rises. This is true, but it doesn’t necessarily mean that you can have one without the other.