We’re all social democrats now as Rishi Sunak joins the global rush to dump Thatcherite verities

Rishi Sunak has discovered the power of social democracy. His ambitious and far-reaching package to address the cost of living crisis is in social democracy’s best traditions – a readiness to tax windfall profits that have resulted from nothing more than unearned and unexpected good luck, borrowing on top and then directing the proceeds to alleviate a fall in living standards, especially among the poorest and most vulnerable, which they did nothing to deserve.

It is, as that titan of Tory thinking Richard Drax MP pronounced, another step towards big state socialism and the sooner the government abandons such alien ideas, echoed the Daily Mail, the better. But they work, are morally and socially right and are popular.

It is a sea change, happening in varying forms across all western democracies. Mr Sunak may protest that he remains a tax-cutting chancellor committed to Thatcherite small-state principles but, whatever else, he is intelligent. It can’t have escaped his attention that all this government’s successes come from doing the opposite – the furlough scheme, the clever procurement process encouraging vaccine development and now seriously addressing the cost of living crisis. “Conservative” reactions in all these instances were useless – and would have led to political dead-ends.

Equally, when attending the IMF and World Bank meetings or a G7 summit, he will have observed that, internationally, there is no political appetite nor intellectual weight behind Thatcherite doctrines. In matters of security, climate change, dealing with an ageing society, addressing inequality, public health or innovation, the right, especially in Britain, has no answers beyond the barren and child-like cries for tax cuts and deregulation. In every area, citizens understand that public action is needed and tax cuts for the rich imply unfairly creating billions of dead money and entrenching unearned privilege. In some version rightwing philosophies may re-emerge in a generation’s time, but for the moment they are a busted flush.

Survey the west. In Europe, social democratic philosophies either govern or dominate coalition governments in Norway, Sweden, Germany, Finland, Denmark, Austria, Spain and Portugal. Italy, Belgium and Holland are in the hands of social democratic leaning centrists. France’s newly re-elected President Macron, prince of centrists, has appointed a former socialist, Élisabeth Borne, as his prime minister, anticipating left gains in the parliamentary elections next month. Canada leans the same way and although the US midterm congressional elections promise Democrat reverses, in presidential elections Democrats win by clear majorities. And last week came Labor’s surprise victory in Australia, cemented by social democratic leaning independents and Greens, notwithstanding the Murdoch press’s manic efforts at characterising the party’s palpably modest leader, Anthony Albanese, as a socialist revolutionary. The decent bested the indecent.

Three forces are at work – lived experience, a new intellectual paradigm and a growing awareness that societies have to act collectively to confront today’s grand challenges.

Rightwing economic thinking has been on the retreat for 20 years now. No remotely sentient economist believes that markets alone spontaneously and consistently arrive at optimal solutions that are best for society and capitalism alike. All the finest frontier economic thought is exploring the dysfunctions of markets, the cost of inequalities and the need to develop better economic institutions – see the list of Nobel economic prize winners since 2000.

Then there is the condition of the people. The world that the right has created – soaring house prices, skeletal welfare, turning workplaces into horror shows of insecurity and poor wages, indifference to the needs and ambitions of the young – has made daily life unpleasant, even insupportable, for too many. There is a yearning for change.

And lastly people know that climate and weather patterns are changing before their eyes and that biodiversity is under assault. They look at their children and grandchildren, knowing they can’t with integrity hand on this world as it is. Voters from Germany to Australia, especially in more affluent areas, are voting green. There are echoes in Britain.

Boris Johnson, unfit though he is for high office, understands much of this. But he leads a party still in Thatcherite la-la land believing that to respond creatively would be “unConservative”. Its strategists hope that attacking the rise of “woke” will reverse the tide.

But a capitalism more mindful of environmental and societal issues is but a response to the explosion of investors’ concerns mirroring those of voters and the minuscule audiences for Piers Morgan’s hysterical anti-woke rants highlight that this is the preoccupation of a tiny minority. What matters is the big stuff that affects lives.

Be sure that the next government, made up of whatever mix of today’s opposition parties, will, like elsewhere in the west, be one that genuinely believes in packages of the character and scale of Rishi Sunak’s last week – and doesn’t need to genuflect to gods that have failed.

• Will Hutton is an Observer columnist