The other economic divide
Right-wing populists in the UK, US and many other countries are deeply split on economic issues. There is considerable political mileage in exploiting (or resolving) these internal contradictions.
Defining populism is tricky when it is a term that can be applied to politicians with very different views. All that really binds them together is a shared story – that elites of some description are exploiting ordinary people.
In the absence of a left-wing populism in the UK, our homegrown variety is a form of authoritarian populism, which espouses anti-elite rhetoric but mostly blames ‘others’ (foreigners and immigrants) for society’s problems. The Reform party, like the MAGA movement in the US, decries elites in public but maintains close ties with them in private.
This is, to a large extent, an effective tactic. Reform’s recent success in the polls is arguably down to a combination of exploiting public concern with immigration while correctly identifying public anger with unfairness – high levels of socio-economic inequality, declining living standards, an eroded social contract, a clear sense of ‘one rule for them and another for the rest of us’.
However, Reform seems so far to be unwilling or unable to lean further into the political opportunities presented by exploiting economic grievances among ordinary Britons. The main reason for this, it seems, is that they are hobbled by internal ideological contradictions when it comes to how they think about the economy.
Among the MAGA movement in the US, the lines of battle have been drawn between what Sam Freedman refers to as “small state tech-accelerationism” and “alt right racial nationalism”. MAGA brings together a volatile coalition of economic nationalists, tech feudalists, disillusioned working-class voters and anti-establishment populists.
In Britain, as Dan Hitchens has observed, there is a clear divide between the economic concerns and preferences of Reform’s median voters and the Thatcherite worldview and policy prescriptions of its leaders, Nigel Farage in particular. Reform’s leaders want free movement of capital but not of people; most of its voters want restrictions on both. Many people are worried about immigration, but most are even more concerned about living standards and the cost of living, deepening levels of poverty, job losses, the hollowing out of communities and the accompanying loss of dignity and respect, the eroded social contract and crumbling public services, all alongside the anti-social behaviours of some wealthy people and companies – profiteering and other monopolistic practices, tax avoidance, influencing politics for their own ends, and all the rest of it.
With the occasional exception (such as a recent interest in renationalising water companies), there is little either in Reform’s rhetoric or in its policy programme that speaks to this public anger about the economy. Instead, Farage talks the language of free markets, of ripping up red tape and rewarding risk-takers. Shaped by the political battles of the late 20th century, he, like many other politicians of his generation, lacks the policy vocabulary to address 21st century issues like platform monopolies or rentier capitalism. The result is symbolic populism - gestures like Reform’s proposed online delivery tax. These are minor tweaks, as per Labour’s modest but politically controversial removal of agricultural reliefs on inheritance tax. These sorts of technical fixes do nothing to alter the underlying power structures that have delivered huge wealth inequality and all of its negative impacts.
A recent report by the Nuffield Politics Research Centre for the Joseph Rowntree Foundation argued that political parties will gain or lose votes based on the extent to which they address, or fail to address, the economic insecurity of voters. An increasing proportion of Reform’s current and potential supporter base are drawn from people living in financial precarity who believe that the system is rigged, rather than from older voters who are economically secure but feel threatened by progressive social values.
However, centrist political parties in the UK are sitting on similar internal contradictions. Centre-left parties across the West have done little more than their centre-right counterparts over recent decades to challenge the fundamentals of the Reagan-Thatcher consensus of unfettered globalisation and free markets. And while authoritarian populists tend to be very good at inventing culture wars to distract from their internal contradictions on economic issues, centrists generally fail to show similar adeptness at controlling the narrative. Instead of targeting the soft economic underbelly of their opponents, centrists generally choose not to engage with the substance of the issues. Worse, they often fall into the trap of framing all critiques of globalisation as ‘populist’ and somehow irrational, in an effort to delegitimise challenges to economic orthodoxy. But arguing that policies like austerity are technocratic necessities that sit outside the scope of democratic debate only serves to drive more people into the hands of their political rivals.
Arguably, none of the main political parties in Britain today are making a proper attempt to grapple with the fundamentals of fixing our broken economy. As already outlined, Reform clings to a Thatcherite agenda while paying lip service to some of the rhetoric of economic populism. Labour is proposing significant and much-needed reforms in areas such as employment rights and housing, but the government is prevented by its own self-imposed fiscal rules from making urgently necessary investments in the public realm, and seems terrified of doing anything to tackle the excesses of wealthy companies and individuals. The Conservatives are almost entirely absent from serious policy debate, although some voices are arguing for action to tackle inequality. The Liberal Democrats campaigned in 2024 for a fair deal and have the potential to make a strong argument for economic reform, but have yet to set this out in detail. And the Greens suffer from being too identified in the public mind as progressive activists, fairly or unfairly, to attract broad support without a change in strategy or tone.
This is not to suggest that all voters want to see much higher levels of tax and spend, or that everyone is behind a wealth tax, or that economic inequality is at the top of every Briton’s list of concerns. But most voters would choose more taxes to support public services over tax cuts, while support for taxing wealth is high, as is concern about inequality. As George Eaton argued in the New Stateman this morning, Keir Starmer and Rachel Reeves recognise that security – economic as well as physical and national – has the potential to define Labour’s hitherto-lacking vision, but on the domestic front, a legislative programme on its own will not deliver the economic security that people crave without more investment in public services and other aspects of the public realm. And Labour cannot fund both a warfare state and a welfare state without relaxing its fiscal rules; shredding the overseas aid budget is both misguided and insufficient.
If one of our political parties decided to make a determined pitch for bold economic reform, they would stand to hoover up millions of votes. There is a huge opportunity to blend a clear, evidence-based analysis of the problems and an actionable policy platform to solve them with a strong narrative, which speaks to popular anger while outlining a vision of a good society (based on fairness, naturally) that is aligned with a positive and inclusive national identity. This would not need to take the form of economic populism, because it could choose be honest about the trade-offs involved, rather than promising painless solutions. But neither should it pretend that minor technocratic fixes could ever be sufficient.
At the same time, such a pitch would need to borrow some lessons from the populist playbook. Whichever party went in this direction would need to pick an enemy. One obvious target would be the companies and individuals who are extracting wealth from society rather than creating and contributing wealth – the beneficiaries of upwards redistribution. These are the monopolies, the tax avoiders, the rent-seekers, the profiteers, those who exploit their workers or supplies or customers, those who fail to mitigate their environmental impacts. And the solutions must include ensuring that they pay their fair share of tax, that their monopoly power is restricted, that they treat all of their stakeholders well. The policy programme must also include action to reduce the influence that these wealth extractors exercise on politics through lobbying and political donations. This would help to unlock progress on taxing wealth, which could be used to fund wealth-building initiatives like a citizens’ inheritance and to restore our public services and social safety net. This approach is not a silver bullet, but it is a prerequisite to delivering change.
If none of our political parties grasps the nettle, then the likely winners are the authoritarian populists, who will be able to continue to blame outsiders and to weaponise the economic roots of the culture wars to their own ends. The task is not so much to defeat populism as to render it unnecessary, by changing the situation on the ground so that rhetoric about the distinction between elites and ordinary people no longer has the ring of truth to it.
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