The death of the centre-right

Liberal conservatism has been killed by the economic system it supported.

“Across the world the center-right has disappeared, virtually overnight” writes Toby Buckle. He’s right. But why?

What’s happening in the US now is a flat repudiation of centre-right values. Tariffs, the state-sanctioned murder of citizens and the pardoning of criminals are the precise opposite of the free trade, liberty and the rule of law championed by Thatcher. True Thatcherites should be as disgusted by Trump as the rest of us are.

But it is not they who are dominating the opposition to him. This comes not from the heirs of Thatcher or Reagan but from centrists such as Carney or Davey and from the left.

One reason for this is that many of those heirs were never really as committed to the cause of liberty as they claimed. They are instead Hayek’s bastards. What they really value is inequality. The only freedom they want is that to exploit and oppress others. They liked free markets when mass unemployment meant that workers had no bargaining power, but are less keen when labour markets are tighter. They like international mobility for capital, but less so for people, especially ones with darker skins. And the free speech they value is that of the racist, not the pro-Palestinian protestor.

But, but, but. This isn’t the whole story. Freedom, a smaller state, free markets and the rule of law are not wholly shams. They are attractive values. The puzzle remains: why, then, is the political tendency that traditionally espoused them so dormant?

To see one answer, just consider the politics of someone under around 35 with a degree and a professional job. They’re those of the left. A recent Yougov poll found that among under-35s in “higher and professional” occupations, 55% support Labour or the Greens against only 12% supporting the Tories and 11% Reform.

Wind the clock back 40 years, however, and things were very different: in the 1987 general election, the Tories led Labour 39-33% among 25-34 year-olds.

The reason for the change is simple. It’s much easier to support liberal capitalism if you own capital or have a hope of doing so. In the 80s and 90s, most young people owned their own houses. Today, only a minority do, and many of those thanks to the bank of mum and dad. If you want to know why young people have turned to the left, don’t bother with talking heads politics shows (in fact, don’t bother anyway): just look in an estate agent’s window.

We’ve gone from the yuppie, driving a flash car and drinking champagne, to the Henry (high income, not rich yet) burdened with high tax rates and even higher rents. Politics has followed the economics. The centre-right is dying for want of new blood.

But it’s not just high property prices that undermine support for liberal conservatism. So too does something else - economic stagnation.

If the economy is growing by around 3% a year - as it was in the 80s and 90s - a younger person can, with the hope of career advancement, expect to double their real income within 10-15 years. When the economy is growing only 1% a year, however, it might take them half a working lifetime to do so. That saps hope.

And hope matters because it helps sustain support for liberal capitalism. In a recent article John Burn-Murdoch reminds us of what we’ve known since Ben Friedman’s publication of The Moral Consequences of Economic Growth 20 years ago:

Democratic backsliding, the advance of populists and the breakdown of the liberal world order have all tracked a clear economic and demographic slowdown....Key underpinnings of liberal democratic societies such as trust and co-operation between different communities and nations are fostered by rising prosperity. It creates optimism and serves as proof for core ideals such as the belief that we all gain if we put the greater good and long-term thinking ahead of narrow self-interest and short-termism...Stagnation breeds a politics of impatience, self-interest, hostility towards out-groups and a “smash the system” disregard for norms and institutions that were centuries in the making.

Stagnation undermines support for the centre-right in another way. Quite simply, it undermines the economic ideology of the centre-right or, if you prefer, classical liberalism.

Thatcherites used to believe that governments could achieve economic growth by a few simple ideas: cut trades union power; lower taxes; run a tight fiscal policy; deregulate and give managers “the right to manage”. And this worked for a few years. But no longer. In the last 20 years real GDP per person has grown by only 0.5% a year compared to 2.4% in the previous 20. The centre-right’s remedy for achieving economic growth has failed. It needs something else.

In fairness to her, Kemi Badenoch recognises this. She has written (pdf) that a “bureaucratic class” is holding back growth by strangling the economy with red tape and by diverting talent and effort away from entrepreneurship towards that bureaucracy. That could be the start of a viable centre-right economic policy.

But, she adds, “too many in our party think that the bureaucratic class and their demands should not be confronted.”

And this captures the centre-right’s dilemma. Raising economic growth today requires an attack upon the sort of professional, high-earning people who were once traditional Tory voters. These aren’t only the lawyers, senior civil servants and HR managers in Badenoch’s “bureaucratic class.” They’re also accountants who’d lose out from tax simplification; owners of expensive houses who don’t want building near them; bosses of monopolistic firms who don’t want more competition; property owners who don’t want taxes to shift from incomes to land; or financiers who do very nicely from the low interest rates that accompany stagnation.

In the 80s Thatcherites thought they could boost economic growth by attacking an out-group - trades unions. This is no longer possible. Raising growth requires politicians to confront traditional centre-right voters. Hence a dilemma for the Tories: they can have a viable economic policy and narrative, or they can cultivate the traditional class base of conservatism, but they cannot do both.

After Brexit, they thought they had an escape from this dilemma. Johnson appealed to older, socially conservative voters. But this was a short-term solution. Those people are either dying or defecting to Reform. And of course in opposing more liberal immigration policies and rejoining the EU these too are enemies of growth.

You might think there’s another way out of the dilemma - to simply accept stagnation and manage it.

This won’t work, for two reasons.

One is simply that, as we all know now, stagnation breeds reaction and illiberalism. Whilst it persists, therefore, the centre-right will always face a challenge from the far-right, tugging it rightwards.

Secondly, if you want to shrink the state - a core principle of the centre-right - you need economic growth.

History tells us this. The share of taxes in GDP rose both between 1979 and 1983 and between 2010 and 2017, despite Tory governments wanting to curb public spending. And it fell between 1975 and 1979 and between 2000 and 2005 under Labour governments. Why the difference? Simply that the economy did well between 1975 and 1979 and between 2000 and 2005 but badly between 1979 and 1983 and between 2010 and 2017. Shrinking the state therefore requires not mere will-power but a healthy economy. The Tory party therefore needs some way to improve growth. Which it does not have and cannot have, given its client base.

I am therefore sceptical of whether Andy Street and Ruth Davidson really can rebuild the centre-right. The irony is that it has been destroyed by the UK’s version of capitalism, the very system it has championed.