Liz Truss’s resignation as Britain’s prime minister after just 44 days in office is the latest indication of a Tory party in chaos. With four prime ministers in six years and four chancellors of the Exchequer (treasurers) in four months, a massive polling deficit against Labour and the party’s business backers in open revolt, the Conservatives are in crisis.
Two things have come together to bring this crisis about. One is the transformation of the party in recent years. The Conservative Party, with 170,000 members, is now a fraction of its former size of 1 million in the 1950s. As it has shrunk, it has become much more a hard-right organisation. Tory leaders, now accountable to the party membership that chooses them, reflect much more the radicalised membership and rather less the party’s traditional reference point: the grandees of British and international capital. Still less do they reflect the voting public.
The 2016 Brexit referendum, designed by Prime Minister David Cameron to smack down the hard right in the party, only gave it room to grow. His successor, Theresa May, could not cobble together a Brexit deal that would satisfy the Brexiteers, and Boris Johnson’s subsequent elevation to prime minister as the champion of this radicalised membership demonstrated the clout of hard right in the party. Johnson’s decisive win in the 2019 general election against an enfeebled Corbyn-led Labour Party only boosted the right’s confidence. Johnson was brought undone by the pandemic, but Truss’s win in the September leadership ballot confirmed the right’s continued hold on the party.
The radicalisation of the Tory base caused a lot of tension inside Conservative ranks. Years of bickering over how to manage Brexit, combined with anger at Johnson’s behaviour during the pandemic, resulted in a splintering of the party’s MPs into hostile factions united only in their mutual disregard. Suspicions grew as electoral support began to recede during the pandemic and Keir Starmer’s Labour Party opened up a big lead in the polls. Truss and fellow right-wing ideologue Kwasi Kwarteng, her first chancellor of the Exchequer, represent only a small ultra-Thatcherite group within the party; it did not take much instability for the knives to come out.
The second factor bringing the crisis to a head is the unwillingness of central banks to continue the policies that stabilised capitalism for the last decade and a half. This has turned politics on its head. Particularly since the global financial crisis, central banks have been willing to lend governments huge sums of money to finance expansive stimulus programs. Capitalism has been kept afloat by steadily rising public debt, while inflation has remained very low.
The situation that emerged this year upended this. Central banks all over the world are forcing up interest rates to reduce significant inflationary pressures. And they are no longer as willing to finance government debt. Indeed, most have been offloading government bonds rather than buying them. It was in this climate that Truss and Kwarteng tried to pass measures that would have pushed government debt even higher.
As Thatcher's disciples, Truss and Kwarteng argued that lower taxes on the rich would lift economic growth, thereby filling the gap between spending and income. The banks and financiers didn’t buy it. They threatened to destroy the country’s pension funds and sold off the national currency. The Bank of England stepped in to purchase government bonds to prevent a rout, but only for five days.
Fearing a renewed collapse in the pound and rocketing interest rates on government debt once the five days were over, Truss sacked Chancellor Kwarteng and installed someone more acceptable to the bankers’ taste: former Health Minister Jeremy Hunt. The new chancellor scrapped most of Kwarteng’s agenda, satisfying the vultures in the City of London. But with the original economic plan in tatters and her own credibility shot to ribbons, it was only a matter of days before Truss followed Kwarteng out of office.
The events of the last two weeks have been a vivid demonstration of who holds power in capitalist society. When capital feels its profits are being threatened, it can bring all its resources to bear to discipline elected officials. This prospect was held above the Labour Party under Jeremy Corbyn’s leadership. The history of capitalist sabotage of left-leaning governments over the past century demonstrates that this was no idle threat.
But the capitalists have demonstrated this time that they are equally prepared to mobilise against conservative governments that don’t do their bidding. Every institution from the International Monetary Fund and the White House to the Treasury and the Bank of England did their bit to smash Truss and Kwarteng’s financial program.
It is difficult to predict what will happen now. The battle to replace Truss is an open field. The only thing that unites Tory MPs is fear of a general election, but hanging on without any obvious circuit breaker only extends the chaos, threatening them with an even bigger wipe-out when the poll is eventually held.
One certainty, however, is that austerity is firmly on the agenda. A leading think tank, the Resolution Foundation, estimates that real incomes in Britain have already dropped every year since the 2008 global financial crisis, and that, unless inflation is stopped or wage growth picks up rapidly, worse is to come. This year alone, real incomes will drop by 4 percent on average, the biggest fall since records began in 1957. The poorest face even more dramatic reductions. One-quarter of all children will be living in households suffering food insecurity, up from just 10 percent during the pandemic, when entitlements were briefly raised.
None of this is an act of God. The Bank of England is squeezing households by jacking up interest rates, pushing up mortgage payments and rents. Big business is taking advantage of the inflationary situation to push up their prices to extract more profit from customers. The Tory government, which promised to impose a two-year cap on energy prices, is now going to “review” the cap in March. With the banks taking an axe to Truss’s unfunded tax cuts, Hunt will announce billions of dollars of spending cuts in his fiscal statement on 31 October to pacify the banks and financiers. The government may even break faith with its elderly constituency by removing inflation indexation of age pensions.
It is heartening, then, that British unions have mounted strikes in defence of jobs and living standards. Railway and bus workers, postal workers and dockers have all struck this year. Civil servants and National Health Service workers—nurses, midwives, ambulance drivers—are balloting for strikes in the coming months. There is an uptick in working-class resistance compared to recent decades when the bosses and governments received little push back to their attacks. This kind of action needs to grow and be generalised across other parts of the economy if the Tory agenda is to be defeated. Only workers’ struggle can stop the flow of profits to the bosses and point the way out of the multifaceted crises of the system.
The current crisis in the Tories has resulted in widespread calls in the labour movement for an early general election. However, the danger here is that the union leaders will allow the strike momentum to be lost as they switch their focus to election campaigning. The uptick in strikes is still not secure and there is a risk that it could dissipate if energy is diverted elsewhere. There are already serious weaknesses and obstacles. Local government workers recently voted two to one to accept the government’s below-inflation pay offer, and different groups of NHS workers might struggle to get above the 50 percent voter turnout threshold required for legal protection for strikes. And despite a lot of talk by the union leaders about coordinating strikes across different sectors, no date has even been set.
It is not as if a Labour government under Starmer would do much to help the working class. The same fiscal squeeze that is causing pain for the Tory government will face any incoming Labour administration. There is no sign that Starmer will implement a significantly different economic program than Hunt: cuts and working-class sacrifice will still be on the agenda. The opposition leader has gone out of his way to impress on business that Jeremy Corbyn’s mild social democratic program is now ancient history. As he told the annual conference of the Trades Union Congress on 17 October: “I’m not just pro-business, I want to partner with businesses to drive Britain forward”.
Many bosses are now beginning to lend an ear to Starmer. They view him as a leader who might stabilise the financial situation and push through austerity without the backlash or the internal turmoil that the Tories are now confronting The Financial Times has joined the call for a general election in the knowledge that it will almost certainly decimate the ranks of Tory MPs and bring down the government. Whatever happens in Britain in the next days, weeks and months, if working-class struggle is not maintained and extended working-class living standards will continue to be forced backwards.