The world has just witnessed one of the most extraordinary political incidents in recent times. Animated by her belief in a fictional version of the free market, British Prime Minister Liz Truss set off a chain of events that forced her to fire the Exchequer chancellor, Kwasi Kwarteng, and led her to precipice overthrown by her own party.
Just over three weeks ago, a “small budget” offer for sale Around £45bn in corporate, income and payroll tax cuts, focused on the wealthy, along with £60bn in energy spending support, has been announced. This is the largest financial package in decades, but it was not reviewed by the necessary financial authorities, nor did Ms Truss hold public office through a general election, which was chosen by Tory members. as replacement leader Boris Johnson. The response to the “fiscal event” was immediate, propelling the world economy to its most critical moment since the Covid crash in early 2020.
The British pound fell to lowest value against the dollar, and the Bank of England had to intervene to prevent the disease from spreading into the pension system and beyond. The stakes of the crisis are Globally. Strangest of all, this was done on purpose, in a deliberate act of policy recklessness, better seen as a gesture of political conviction.
There is something tragic, if not tragic, about the capitalist revolutionaries that Ms. Truss and Mr. Kwarteng posed by the very mechanism of capitalism. Ms. Truss and Mr. Kwarteng may be the last of the Thatcherites, to be defeated by the very system they believe they are acting on.
The development of the ideology known as Thatcherism began in the 1970s. Define Soon Belief in a “free economy and strong state”, Thatcherism denounced the postwar British welfare economy and sought to replace it with the virtues of individual enterprise and religious morality. teacher.
Over the next four decades, Thatcherites at think tanks such as the Institute of Economics and the Center for Policy Studies (which Margaret Thatcher helped found) described the struggle against both the Labor Party and the persistence broader of Socialism within the Communist Party and not the Communist World as a “war of ideas.”
The breakthrough in the war of ideas came in 1979 with the election of Thatcher, followed by Ronald Reagan the following year. The ideas put forward by think tanks – from privatization to breaking up the union – had a period of adoption in the 1980s, but Thatcherism was never realized and it persists. contradictions. Many of Thatcher’s true believers attribute her project’s derailment to the rise of the European Union, which, in their view, left the homeland of classical liberalism in the red tape of the law. European law.
Losing leadership in 1990, Thatcher continued to grumble from behind, becoming increasingly hostile to the European Union and finding comfort with an ultra-hardline Tory group. These Thatcherits, collectively known as extremists, were in fresh blood in the 2010s when a group of Gen Xers were too young to experience Thatcherism during the early years of the uprising – including former foreign minister Priti Patel , former foreign minister Dominic Raab, former minister. of the state for colleges – Chris Skidmore, Mr. Kwarteng and Ms. Truss – tried to reboot her ideology for the new millennium.
They follow their idols not only for her opposition to organized labor but also for her little-known fascination with Asian capitalism. In the 2012 book “Britannia Unchained”, a book co-written by the group that remains the Rosetta Stone for last month’s policy surprises, they stoned Britons for their eroded work ethic and ” advocacy culture” and the “public” of industry unions. They praised China, South Korea, Singapore and Hong Kong. “The average Singaporean works an average of two hours and 20 minutes longer a day than the average British,” they observe – as if longer workdays were something to be desired. “Britannia Unchained” expresses a desire to return to the future by restoring Victorian values of hard work, self-improvement and bootstrapping.
While Gen X Thatcherites don’t process the data, they also see something unresolvable at the root of the unrest in the UK. “Apart from statistics and economic theory,” they wrote, “there is still a sense in which many of Britain’s problems lie within cultural values and thinking.” Like Thatcher himself put it, “Economics is method; The object is to change hearts and souls. “Britain needs a leap of faith to recover.
In a passage repeated many times in the corridors of think tanks, the British Austrian economist Friedrich Hayek said in 1949 that a necessary weapon in the arsenal of the war of ideas is “a free Utopia”.
The small budget that ended Mr Kwarteng’s Exchequer term as prime minister and crashed the pound could be seen as an act of utopia, a voluntary act designed to get the British people out of the loop. their post-pandemic swirl through its audacity. Ms. Truss and Mr. Kwarteng seem to have believed that by combining all of Thatcherism’s most radical policies (while conveniently removing the need to cut spending) they would have a charm. uncle, an “Open Sesame” to “Global Britain.” This is their Reagan moment, the moment when, as their favorite metaphors put it, a primal repressive force would be “unlimited,” “liberated,” or “unchained.”
But like a leap of faith, it broke the diver’s neck.
The result is a disparity between the dynamics of existing capitalism and the fairy tale of utopian freedom. Just like Brexiteers have discovered After the country left the European Union and the City of London really didn’t want to be freed from the regulations it had promised, the money markets weren’t waiting for an act of faith in fundamentalism after all. of the Laffer Curve. This is “No Dollar Reorganizationism.” With no confidence in the global reserve currency, the pound is in free fall.
Since the 1970s, the world of think tanks has embraced a world framework of discrete spaces that can become what they call a laboratory for new policies. The small budget has put the whole economy into the experimental treatment. This was made plainly in a celebratory post by a Tory journalist and thinker claim that Ms. Truss and Mr. Kwarteng were “incubated” by the Institute of Economics in their early years and that “Britain is now their laboratory.”
The frame captures the situation well. Scientists at the bench have found that money markets are not only punishing leftist experiments in altering the balance between states and markets, but are also sensitive to experiments. Try pushing too far to the right. Ms. Truss apologized and Mr. Kwarteng’s successor reversed nearly all plans to cut and limit energy assistance.
Whether Thatcherism is dead is too early to judge. Political religions have a long history.
