03.11.2022

Man of the markets

Kevin Bean predicts that the prime minister will not have an easy ride. Already all the signs of trouble are there and a renewed outbreak of factional war looks likely

By the standards of recent Conservative Party leaders, Rishi Sunak has been given a relatively easy ride in his first days as prime minister. The overwhelming endorsement he received from Tory MPs, the positive response of the Tory-supporting media and the almost inevitable bounce in the opinion polls got him off to a good start. The real possibility of a Labour landslide in the next general election seems to have concentrated the minds of Tory backbenchers and ensured, for a few days at least, a show of unity - in sharp contrast to the near civil war of the past year or so. However, this period has something of a ‘phoney war’ feel to it, and the signs of trouble are there to see: growing working class revolt, another round of austerity, the energy-cost crisis, rising interest rates, an escalating war in Ukraine.

The underlying tensions within the Tories at Westminster still remain too, as the carefully balanced composition of the cabinet shows. Sunak has brought representatives of all the major Tory tendencies into his government, while excluding obviously problematic individuals. The current controversy over the treatment of migrants at Manston and the reaction of home secretary Suella Braverman show the difficulties that strategy will entail. Braverman had to be brought into the tent to buy the support of the Tory right and keep her and the European Research Group under some kind of control. This is especially important, given further potential crises ahead over the Northern Ireland protocol and probable tax rises in the autumn financial statement on November 17. Her ‘invasion’ rhetoric and insouciance in the face of media and parliamentary criticism test the limits of Sunak’s strategy, as well as protecting his right flank; however, it is hardly a recipe for long-term cabinet stability and harmony amongst Tory MPs.

There are clearly tensions between the ‘red wall’ MPs in particular and the party leadership over levels of public spending, the triple lock on pensions and the implementation of the ‘levelling up’ agenda. Expectation management and briefings in advance of the autumn statement indicate probable major cuts in public spending and the severe delay or even abandonment of major ‘levelling up’ infrastructure projects, such as HS2. Backbench opposition and parliamentary revolts on these issues can be expected if the government’s U-turns on manifesto commitments are even a fraction of those predicted in the off-the-record briefings and hints floated by members of Sunak’s cabinet. So, while there may be a period of relative calm from all sides, after November 17 things could look very different indeed.

Leaving aside these future factional difficulties, Sunak’s uncontested coronation and first weeks in office have taken the form they have for two interrelated reasons. One is the fear of a Tory electoral meltdown in the coming general election: Sunak’s appeal for many Tory MPs was as a ‘safe pair of hands’ after the disastrous Truss-Kwarteng interlude. Moreover, Rishi Sunak and Jeremy Hunt represented the ‘adults in the room’, who could be relied upon to restore confidence and stability after a much longer period of turbulence that extended much further back into Boris Johnson’s period at No10.

The second reason was that Sunak had the support of the markets and so some type of order could be restored - giving a breathing space for the Tory government and a chance to reset economic and political policy. To see just how finely attuned the markets are to the nuances of internal Tory politics, look at their negative reaction over the weekend of October 22-23 to the possibility that Johnson might return as Tory leader and its impact on sterling and possible interest rate rises. On this occasion, the former deputy governor of the Bank of England, Charlie Bean, was the human conduit for the message of the impersonal and implacable markets, but he clearly reflected the fears of a substantial section of the financial establishment and wider currents in British capitalism more generally. The Tory-supporting media and Conservative backbenchers duly heard the call and anointed the new leader, their man of the markets, Rishi Sunak.

Capital

It would be wrong, however, to simply understand the Tories as the unmediated mouthpiece of a unified capitalist class. The elevation of Sunak, as well as the election of Truss and Johnson before him, tells us a great deal about the way that the character of the Conservative Party has changed. Above all, although the Tories remain the main representatives of bourgeois politics and defenders of capitalist interests in the last resort, the direct relationship between the Tories and British capitalism has significantly shifted in recent years. It was the petty-bourgeois Tory membership which elected Johnson and Truss, supporting Johnson’s populist, hard Brexit line and Truss’s promises of tax cuts. Neither strategy was supported by the dominant sections of British capitalism and this ‘takeover’ of their historic party reflected the wider decline of the British ruling class - not to mention the decline of a British-based manufacturing economy and the financialisaton of British capitalism.

In one way the leadership selection solely in the hands of Tory MPs is a return to business as usual - it kept out the ‘disruptive’ Boris Johnson and resulted in a ‘reliable’ premier. Given the experience of the last two Tory prime ministers, some Conservative grandees, such as William Hague, want to end the involvement of the membership and return the right to elect the leader to Tory MPs alone. Whether that happens or not, the rise of Sunak has not restored the old relationship between British capitalism and the Tories. He may be a competent and safe pair of hands, in contrast to his immediate predecessors, but Sunak is still a product of the new post-Brexit Tories and the very model of a modern ‘man of the markets’.

His politics and his connections are rooted in a quite specific and distinctive section of British finance capital. Within the financialisaton of British capitalism - evident, for example, in the growth in significance of banking, insurance, pension funds, property development and financial services - hedge funds and the more ‘sophisticated’ financial derivatives and securities have become increasingly important. It is this area of ‘the markets’ in which Rishi Sunak has worked and made his considerable personal fortune, and it is this arcane field that has shaped his politics and in particular his understanding of the future of British capitalism.

The various profiles of the new prime minister that have appeared in the bourgeois press have stressed the importance of this background to his politics, along with his commitment to Brexit.¹ Although the majority of British capitalists, especially in the City and other areas of finance capital, were remainers, quite important players in the more ‘buccaneering’ (or riskier, depending on your point of view) hedge funds and more globalised sectors of finance capital favoured Brexit.² This can also be seen in the list, recently revealed in the media, of supporters and contributors to Sunak’s leadership campaigns. Although this has something of the general character of donations to the Conservatives as a whole (few manufacturing companies and traditional donors like the brewers make direct contributions to the Tories today), there are some important differences.³ Contributions to Sunak’s campaign came from property developers, financial entrepreneurs, hedge funds, public relations and some niche sectors of engineering and mining.⁴ If this segment of Sunak’s support amongst the capitalist class is anything to go by, his rise represents the interests of these upstart elements.

However, whilst his direct support and individual connections can be found in this rather narrow section of capitalism, Rishi Sunak will be forced to act in the wider interests of the ruling class as a whole and, above all else, listen closely to aggregated power of ‘the markets’. The economic and political options open to the new government are limited, and its room for manoeuvre clearly circumscribed by the need for fiscal discipline and ‘the black hole’ in public finances. There are a lot of manifesto commitments that cannot be kept and circles that cannot be squared. Meeting all the conflicting demands and satisfying all of the different interests represented by various Tory factions will be impossible.

Sunak’s reversal of his decision not to attend the Cop27 climate summit, in response to both domestic and international pressure, and his announcement that he is “tearing up manifesto promises from his leadership campaign”, will be just the first of many U-turns and policy retreats that lie ahead.⁵ Despite the current, although rapidly disappearing, sense of calm surrounding the new prime minster, his will be a government of crisis. This ‘man of the markets’, and his government, will live and die by the judgement of those very same markets. ‘The markets’ understand the fundamental weaknesses of British capitalism and know exactly what Rishi Sunak’s government needs to do to buy some temporary respite at least for the ruling class.

Sunak does not have much time to get to work on their behalf, and, as Liz Truss could tell him, when he fails to measure up, he will find out just how unforgiving the judgement of ‘the markets’ can be.