When Narendra Modi was elected prime minister in 2014, many free-market conservatives – especially those of an optimistic temperament – thought they finally had their man. While Modi’s critics compared him to a range of authoritarian politicians, past and present, from Turkish President Recep Tayyip Erdogan to Indira Gandhi to Hitler, commentator Gurcharan Das spoke for others of his persuasion when he hoped that India’s 14th prime minister would be our Margaret Thatcher.

“His Thatcherite rhetoric of ‘less government and more governance’ [actually, minimum government, maximum governance] resonates with the aspiring middle class,” Das wrote. Other free-market conservatives, such as Tavleen Singh, Surjit Bhalla and Sadanand Dhume, none of them sympathetic to Hindutva, hailed the arrival of India’s first true pro-business reformer. Thatcher, wrote Bhalla, had “achieved the near impossible by changing forever the mindset of a socialist, outdated England. For many an Indian voter, the ballot for Modi represented a demand for a similar modern mindset”. Those more familiar with the United States than Britain compared Modi to Thatcher’s friend and ally, Ronald Reagan.

Theresa May was also, predictably, called a new Thatcher when she replaced David Cameron last year – the comparison to the only other female British prime minister, also a Tory, was too easy to resist. Now, with May having called for her first election as prime minister on June 8, and three years into Modi’s term, no one is making any Thatcher or Reagan comparisons. Both the prime ministers of Britain and India are leading their right-of-centre parties in a remarkably un-Thatcherlike direction.

Thatcher and Reagan entered office following over three decades of what, on both sides of the Atlantic, was more or less a Keynesian consensus. Parties of Left and Right broadly agreed on the expansion of the welfare state, and on corporatist management of the economy, with a significant role for the state, and with trade unions as powerful stakeholders. Changes in government did not lead to drastic changes in economic policy. The one free-market conservative to challenge this consensus, Barry Goldwater, was routed in the 1964 United States presidential election.

Thatcher and Reagan redefined economic conservatism as the promotion of individual free enterprise. Regulations were loosened or scrapped across different sectors of the economy, most notably in finance; state assets were privatised, and the expansion of the welfare state slowed; taxes were cut for individuals and businesses; entrepreneurs, small and large, were valorised, and the pursuit of wealth legitimised. Their greatest achievement was the transformation not merely of their own parties but of the Centre-Left opposition. Both the Democrats in the United States and Labour in the United Kingdom abandoned social democracy in favour of an openness to business.

United States President Donald Trump, for all his protectionist and populist campaign rhetoric, has governed thus far in the Thatcher/Reagan tradition of tax and spending cuts and deregulation. Modi and May, however, are actively leading conservatism in their countries away from the embrace of business and free markets.

May’s policy priorities

In May’s case, the move away from Thatcherite economics is overt, in terms of both rhetoric and policy. She has promised to fight against “the cult of selfish individualism”, opposed “untrammelled” free markets, defined “the good government can do” as “righting wrongs” and “challenging vested interests”, promised to put government “squarely at the service of ordinary working-class people”. She has vowed, “The government’s agenda will not be allowed to drift to the right.” This is a lot closer to Jeremy Corbyn, Britain’s Leader of the Opposition, than it is to Thatcher.

She has refused to commit her government to tax cuts. And, like Modi, she has endorsed the policy tool loathed more than almost any other by free-market conservatives: price caps. Where Modi’s Ude Desh ka Aam Naagrik (or Udan) scheme introduced a cap of Rs 2,500 for many tickets on short-haul flights, May has promised, if re-elected on June 8, to cap energy prices for a majority of British households. Such a move might not be seen as Conservative, she admits, but “supporting working people” comes before ideology.

But May’s greatest departure from free-market, pro-business conservatism is her approach to Britain’s ongoing departure from the European Union, and to the related question of immigration. Thatcher is often associated with hostility to Europe, but it was she who led Britain into the Single European Act, which established the single market in goods, capital and labour that May now seeks to exit. Each repetition of her slogan, “no deal is better than a bad deal”, provokes shudders in the City of London and for British business, which overwhelmingly supports a deal that will preserve Britain’s access to the single market, and to the immigrants without which the British economy cannot, at present, do. The stated interests and aspirations of British finance and industry fail, to an astonishing extent, to figure in May’s policy priorities.

Theresa May's economic approach is closer to that of Labour leader Jeremy Corbyn than to Margaret Thatcher, despite the comparisons. (Credit: Toby Melville / Reuters)
Theresa May's economic approach is closer to that of Labour leader Jeremy Corbyn than to Margaret Thatcher, despite the comparisons. (Credit: Toby Melville / Reuters)

Where is Modi the reformer?

Narendra Modi is, contrary to his image, a rhetorically cautious politician, except when in campaign mode. Unlike May, he has never really signalled hostility or even scepticism towards business or the free market. But nor, in three years, has he done anything of note to redeem the hopes of those who saw him as the long-awaited free-market reformer who believes that business, not the state, is the engine of economic growth.

He has done little to stimulate private investment or to address the corporate debt crisis that is perhaps the greatest impediment to such investment. Instead, he focuses on public investment, which is both insufficient to make up for the private sector, and anathema to free-market, small-state conservatism. He has not taken up labour law reform at the Central level, or privatised Air India or other large, inefficient public sector companies. He failed to pass the new Land Acquisition Bill demanded by industry in 2014 and has not attempted a revival. While he has endeavoured, such as through Digital India, to improve the efficiency of public services, he has not reversed United Progressive Alliance-style welfare spending of the sort that his own chief economic adviser used to call “fiscal populism”. He has repeatedly promised an end to “tax terrorism”, but largely delivered the opposite.

As with May, Modi’s approach to the economy extends beyond an aversion to new free-market reforms. Demonetisation showed his willingness to inflict pain on Indian business and on the economy as a whole. The targeting of cow slaughter, and of India’s thriving buffalo meat export industry, are another potential case of induced economic harm. Not only is Modi no Thatcherite reformer, he also does not appear especially interested in maximising India’s growth potential. His policies have now led to a predictable decline in economic growth, what the economic commentator Mihir Sharma calls the “Modi Slowdown”.

May and Modi are not moving their parties leftward in a conventional sense, they are, rather, abandoning conventionally sound economics in favour of an alternative form of policymaking that sacrifices economic thinking, whether rooted in facts or ideology, at the altar of politics. This new form of conservatism is often called populist, but in the hands of May and Modi, it is, above all, nationalist.

Demonetisation showed Modi's willingness to inflict pain on Indian business and on the economy as a whole. (Credit: IANS)
Demonetisation showed Modi's willingness to inflict pain on Indian business and on the economy as a whole. (Credit: IANS)

True Brits and Proud Indians

May and Modi are nationalists by ideology and temperament, but they also see nationalism as the best political strategy for conservatism. Nationalism, unlike Thatcherism, allows Right-of-Centre parties to expand socially. May has openly targeted working-class voters (free-market conservatives like to pretend that all their voters are middle-class), and Modi’s Bharatiya Janata Party has courted Dalits and Other Backward Classes with spectacular success. Instead of being seen as representing business elites or upper castes, they have been rebranded and now stand for all True Brits or Proud Indians. This strategy depends upon the othering, implicit or explicit, of anti-national groups: immigrants for the Tories, Muslims for the BJP, cosmopolitan liberals for both.

Brexit for May, beef and demonetisation for Modi: economic damage is worth it, politically, if it can be justified in nationalist terms. Often, such policies are depicted, falsely, as largely affecting the elite. Since the working-class voters May and Modi covet have seen disproportionately few gains from economic growth, they are unconvinced by elite arguments against, and are in fact happy in the belief that the elite too are suffering for a change. Thus far, Modi’s electoral record justifies his strategy. May has run a stuttering campaign – she is a vastly inferior campaigner – but her nationalist approach to the economy remains broadly popular.

It is too early to say whether the turn to nationalism represents a long-term shift for conservatism, either in Britain or in India. May and Modi are, at present, aided by the business perception that there is no alternative (ironically, the phrase Thatcher used to defend the free market). In the 1990s and 2000s, a near-global consensus in favour of the market saw business back both Centre-Right and Centre-Left parties. The Labour Party’s move to the Left under Ed Miliband and Jeremy Corbyn, and the corruption, welfarism and economic mismanagement of the Congress-led United Progressive Alliance led British and Indian business to overwhelmingly side with the Tories and the BJP.

Now, the range of responses from business to May and Modi – at least in private – is from disappointment to betrayal. But Corbyn, who places ideology firmly before politics, is too hostile to private enterprise to represent an option. The Congress, meanwhile, is perceived as incompetently run and electorally unviable. Whatever the economic consequences, May and Modi may get away with their political strategy for years to come.