The reality behind Truss' economic plan

'Do-it-for-myself' economics: the political economy of Liz Truss

Liz truss article no grain

With the recent announcement of Liz Truss as Britain’s new prime minister, many still wonder what inspires her politics. The answer, argues Dr Simon Lee, lies in a new kind of ideology - ‘Do-It-For-Myself Economics’, a confection of politically expedient, headline-grabbing soundbites designed to appeal to the prejudices of Conservative Party members and advance her own personal career ambitions.

 

In his 1985 BBC Reith Lectures, the economist David Henderson developed the thesis of 'Do-It-Yourself Economics'. This thesis argued that, over wide areas of policy, including economic policy, the judgement of politicians and their officials was guided to a large degree by 'Economics of Everyman', i.e. ‘the intuitive ideas of lay people, rather than the more elaborate systems of thought which occupy the minds of trained economists’.

What the hustings of the Conservative Party leadership contest has revealed about Liz Truss is that her thinking on economic policy has been shaped, not so much by Henderson’s ‘Do-It-Yourself Economics’, but rather by her own ‘Do-It-For-Myself Economics’: a confection of British nationalism, politically expedient, headline-grabbing soundbites designed to appeal to the particular prejudices of Conservative Party members and thereby advance her own personal career ambitions to succeed Boris Johnson as Prime Minister.

In relation to Truss’ ‘back-to-basics’ crime and policing strategy, one Chief Constable has described Truss’s soundbites as ‘attractive headlines’ which are ‘meaningless without further explanation’. The same can be said for Truss’s political economy which only makes sense when placed in historical context.

Truss has claimed to possess ‘a bold new economic plan’, offering ‘a vision of a low-tax economy with sound economic stewardship, that puts personal freedom and responsibility at the heart of everything we do, and is on the side of hardworking people’.

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‘Do-It-For-Myself Economics’: a confection of British nationalism, politically expedient, headline-grabbing soundbites designed to appeal to the particular prejudices of Conservative Party members and thereby advance her own personal career ambitions to succeed Boris Johnson as Prime Minister

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This vision is to be delivered via tax cuts, by ‘reversing the National Insurance rise and stopping the planned corporation tax hike’, and unlocking ‘the huge opportunities of Brexit with bold reforms to grow our economy’. Truss has also promised to challenge the Treasury and ‘to take on that orthodoxy, sometimes the risk aversion, to be able to get things done’.

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Truss has claimed that this plan ‘is in line with our true blue Tory values: low taxes, deregulation and bold supply-side reforms’. But her offer of ‘full-fat freeports and new investment zones’ is simply not aligned with the traditional core tenets of British conservatism.

Such an ideology proposes a limited role for the state to protect private property rather than free market capitalism. It also seeks to conserve an organic society and orderly change rather than a permanent revolution of market-led transformation.

Truss’s statements during her leadership campaign have instead aligned her with the core tenets of the orthodox ‘developmental market’ model of liberal political economy. Namely ‘entrepreneur-led innovation, competition, profit, liberalization, deregulation and privatization’, which has dominated the Conservative Party’s economic thinking for the past 43 years.

These ideas were first espoused in 1974 by Margaret Thatcher and Sir Keith Joseph, following their establishment of their own think tank, the Centre for Policy Studies (CPS). The purpose of the CPS was nothing less than ‘to change the climate of opinion’ in British politics. This would be accomplished by comparing ‘our own experiences and those of our European neighbours’ and then persuading people that Britain needed a social market economy, namely one in which ‘responsible policies work with and through the market to achieve wider social market aims’.

Thatcher and Joseph’s reappraisal of Conservative economic and social policies in Opposition between 1974 and 1979, and their delivery of privatization, and market deregulation and liberalization during the 1980s, were but the first ‘stepping stones’ to deliver ‘a sea-change in Britain’s political economy’.

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In now confronting the current cost-of-living crisis, which threatens to wipe out all pay growth since 2003 and deliver the biggest two-year fall in household income for a century, Liz Truss’ ideological and policy vision offers no solutions

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David Cameron’s ‘Age of Austerity’, and Boris Johnson’s delivery of Brexit were but two further stepping stones. Now it is Truss’s intention as Prime Minister to deliver the next and possibly final stepping stone in that sea-change in political economy.

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Truss had signalled this intention by co-authoring two books, After the Coalition: A Conservative Agenda for Britain in 2011, and Britannia Unchained: Global Lessons for Growth and Prosperity in 2012. The former of which, in Chapter 5, contained the campaign policy pledge of ‘no handouts’ which had been titled ‘Welfare: Ending the “Hand Out” Culture’.

Similarly, Truss’s statement in 2019 to the Chief Secretary to the Treasury, that British workers needed ‘a bit more graft’, merely repeated the assertion in Britannia Unchained that ‘the British are among the worst idlers in the world’.

In now confronting the current cost-of-living crisis, which threatens to wipe out all pay growth since 2003 and deliver the biggest two-year fall in household income for a century, Liz Truss’ ideological and policy vision offers no solutions.

Even before the onset of the coronavirus pandemic and the ongoing cost-of-living crisis, the developmental market was a broken model. It had failed to reverse the United Kingdom’s relative economic decline. A 40-year reassessment of Margaret Thatcher’s legacy in her own terms had revealed that every United Kingdom government since the first Thatcher government has delivered a slower rate annual average of economic growth.

Consequently, in the wake of the 2007-8 financial crisis, the British people had to endure what the then Governor of the Bank of England described as ‘the first lost decade since the 1860s’, an entire decade of falling, real average incomes (allowing for inflation).

Prime Minister Truss has promised to unlock ‘the huge opportunities of Brexit’. But there are none. Even the Minister for Brexit Opportunities, Jacob Rees-Mogg, has conceded he was wrong not to admit Brexit would result in the ongoing lorry queues at Dover.

Furthermore, The United Kingdom’s woeful trade performance, which saw it record a balance of payments’ deficit in its transactions with the rest of the world of £51.7 billion during the first three months of 2022, has demonstrated that stark reality.

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Unless Prime Minister Truss chooses to take some stepping stones towards an alternative economic plan, and one which mirrors the £376 billion of public spending provided to surmount the coronavirus pandemic, and by the Johnson Government in which she herself served, the British people will confront the prospect of a second lost decade.

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