Leader: The new right economics

In the UK and the US, conservative politicians are moving leftwards as they confront market failure and excessive austerity. 

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Ever since the Thatcher era, the Conservative Party has been inseparable from free-market economics. A party traditionally sceptical of dogmatism embraced privatisation, deregulation and tax cuts.

The cabinet assembled by Boris Johnson includes many who wanted David Cameron to go further in imposing austerity and reducing the state. The Chancellor, Sajid Javid, is a devotee of the libertarian philosopher Ayn Rand. There are other ardent free-marketeers, or Randians – Liz Truss, Dominic Raab – in the cabinet.

But the government’s programme has been less orthodox than might have been expected. In the recent Spending Review, Mr Javid announced a 4.1 per cent rise in expenditure, the largest increase in public spending for 15 years (including a 3.1 per cent rise for health, 3.3 per cent for education and 6.3 per cent for the Home Office). For the first time since 2002, no government department will endure cuts.

The once-cherished ambition of a budget surplus has been abandoned (borrowing rose by 28 per cent in the first five months of this financial year) even as the national debt stands at 80.9 per cent of GDP. Just as George Osborne’s Keynesian opponents once did, Mr Javid argues that ultra-low borrowing costs mean the state can afford to invest and expand.

This left turn, if one can call it that, is not limited to public spending. In his Conservative conference speech on 30 September, Mr Javid declared his intention to increase the minimum wage to £10.50 by 2024, raising it to two-thirds of median earnings. A party that voted against Labour’s introduction of the minimum wage in 1998 now aspires to give the UK one of the world’s highest.

In the US, some conservatives are on a similar journey (as Dan Hitchens noted in last week’s magazine). A manifesto recently published in the journal First Things, a bastion of the intellectual right in America, called for “a political movement that heeds the cries of the working class as much as the demands of capital”. The Fox News presenter Tucker Carlson complained to his three million viewers that “Republican leaders” were in thrall to “corporate propaganda” and seemed to have forgotten that “market capitalism is not a religion”.

As in the UK, the American government has subordinated fiscal conservatism to a project of national greatness. Under Donald Trump, the US budget deficit has swelled to 4 per cent, its highest level since 2012, after a surge in public spending (albeit accompanied by dramatic tax cuts).

Does Mr Johnson and Mr Trump’s apparent embrace of the state – one could call it reactionary Keynesianism – reflect more than their political opportunism? Or are there other forces in play?

Theresa May, Mr Johnson’s predecessor, also sought to rehabilitate the state as an economic actor and, for a time, before she lost the Conservative majority after a disastrous election campaign in 2017, she attempted to use a more distinctive language of social justice, duty and reciprocity. Her successor has maintained many of her policies – such as higher NHS spending and council house-building – but without any overarching philosophy.

Yet the right’s statist turn in the US and UK is an unmistakable symptom of new times. In the late 1970s, when the Thatcher and Reagan counter-revolutions began, it was the postwar Keynesian consensus that seemed exhausted. The social democratic left lacked answers to the challenges of state failure, high inflation and trade union militancy.

Since the financial crisis of 2008, it is the free-market consensus that has frayed. After a decade of austerity in the UK, voters crave a protective state, not a shrunken public realm. Is this the beginning of a new economic and political consensus or mere political positioning?

For sure, there is palpable yearning for a more communitarian conservatism. A new right economics is inchoate but it could yet presage a post-crash settlement. And as happened at the end of the 1970s, it could be the right rather than the left that exploits this moment of crisis for electoral gain.

This article appears in the 02 October 2019 issue of the New Statesman, The Brexit revolutionaries

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