Economists will be familiar with Gresham’s Law, the principle that bad money drives out the good. What is less well appreciated is that the theory also applies to politics. As Britain’s modern Conservative party amply demonstrates, politicians can enter a similar doom loop where ideology drives out realism, faith routs nuance and political purists banish pragmatists.
The political version of debasing the currency sees ideological factions drive out rival views in a battle that ultimately narrows the base of a party. Parties that fail to stop this, especially in majoritarian voting systems which reward broad coalitions, are on a path to political putrefaction.
This is not a uniquely Tory problem. Jeremy Corbyn’s Labour offered almost the perfect example after his hard-left takeover of the party. Moderate MPs left, were forced out, formed new parties or simply sat on their hands on the backbenches as the party plunged into unelectability. Others fled Westminster for the sanctuary and autonomy of life as a regional mayor.
Another clear example of this political debasement is offered by US Republicans in the era of Donald Trump. Fearful of defying the MAGA mobs, those in the party who ought to know better are conniving in the fiction of a stolen election and securing candidacies by signing up to his platform. Once this happens, good people melt away.
Truss’s Tories are not in that league but they display many of the signs of late-stage political debasement. This is a world where political purity trumps all other qualifications, so you elect as leader someone who admits to being a poor public performer because she fits the ideological profile; as if, in modern politics, communications skills are only a “nice to have”. It can be seen in allies who denounce your Thatcherite rival for leader as a socialist because he raised taxes to guard the public finances. Here, a home secretary, appointed for leading the most hardline Brexit faction, describes a parliamentary backlash against a botched Budget as a “coup”. Cabinet ministers squabble openly.
As relevant is intolerance. For the last six years, the Conservatives have shed decent, mainstream and talented MPs. Under Boris Johnson, Remainer rebels not actually expelled from the party were excluded from office. Many left at the last election.
Now Truss, who won as the candidate of the uncompromising right, has similarly expunged supporters of her leadership rival Rishi Sunak from full cabinet. Some of this is inevitable attrition. She is not wrong to demand a team that supports her policies but when even pragmatic Brexiter MPs are now outside the tent, the available talent pool thins. The weak drive out the strong.
Sacking the top Treasury official signalled to the ambitious to hold their tongues. Ministers keep their heads down. The result is a government that has no one with the political antenna and clout to check the ideological sugar rush — or to see how an unfunded tax cut for the wealthy during a cost of living crisis would play out, even before it spooked markets and raised mortgage rates.
An argument can be made for Truss’s ideas — parties are, after all, meant to have political direction. But the vision must be moored to circumstances. You can only sail the ocean you are in. Spurred on by free-market think-tanks such as the Institute for Economic Affairs and the TaxPayers’ Alliance, Truss and her chancellor Kwasi Kwarteng drove through a “mini” Budget powered by ideology that matched neither the moment nor the markets.
Can the Tories arrest the decay? Theoretically yes. Truss has more than two years until the election must be called, time enough to shift the narrative. The economic storms may ease. Labour’s huge poll leads are less about enthusiasm for the opposition than contempt for the government.
And there some small positives. Truss did ultimately retreat over axing the 45p top tax rate. There is an effort to reset the relationship with the EU. Second-order policies are being shelved. There is an urgency about ensuring delivery; many Tories praise the co-ordinating skills of Nadhim Zahawi, the cabinet office minister who describes himself as the government’s chief operating officer.
Some still hope to correct the course. The revolt against the “mini” Budget was led by former cabinet colleagues such as Michael Gove and Grant Shapps. One prominent rebel argued that there was a battle to stop the “libertarians at the top” pulling the party away from conservative values or becoming the “political arm of the think-tanks”.
But these are thin straws to clutch. There is also a mutinous party, a leader who cannot communicate with voters and has fractured the Tories’ winning electoral coalition, an inexperienced ministerial team and a shattered reputation for competence.
The public’s first impression of Truss has been both disastrous and deserved. Perhaps she will grow as leader. The backlash may temper her instincts. But those of us who have watched previous governments disintegrate detect the familiar smell of death.
Historically, there is only one route back from the deepest doom loops: opposition. Parties lose office or are kept from it until they regroup and learn to prioritise the concerns of voters over the fever dreams of activists. Truss should appreciate this. It is the market solution.
robert.shrimsley@ft.com
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