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Wednesday 30 January 2019

The problem with Britain’s Conservatives? Too few Tories

The UK’s ruling party is in a mess because of its previous successes

By Chris Dillow

“To be conservative”, wrote the philosopher Michael Oakeshott, “is to prefer the familiar to the unknown, the tried to the untried, fact to mystery.” From such a perspective, Brexit – and especially a Brexit which will take an as-yet-unknown form – is a wholly unconservative project.

It’s unconservative in another sense. Conservatives, said Oakeshott, thought it the job of government to deflate passions, “to pacify and to reconcile”. In this spirit, Jesse Norman – now a transport minister – has written that a “deeply and distinctively conservative line of thought” is that which “pushes us away from ideology and towards scepticism”. We’re seeing little of this in the Brexit debate, however. It is one thing to think Brexit a good idea – to believe it worth sacrificing some national income for a greater sense of sovereignty or community. It is quite another to think it so important that it should dominate politics to the exclusion of all else.

Of course, Oakeshott’s is only one conception of conservatism. By his standards, Margaret Thatcher was no conservative either, in her desire to build a new economy and destroy familiar institutions such as trade unions and the machinery of central planning.

But there’s a paradox here. It’s that although many Brexiters pledge fealty to Thatcher, they are in some ways behaving very un-Thatcheritely.

Thatcher – following Milton Friedman – thought governments should provide stability so that managers could focus on running their businesses rather than trying to second-guess politicians. “An economy will work best when it is built on a framework of clear and predictable rules on which individuals and companies can depend when making their own plans,” she said. This, of course, is the antithesis of Brexit.

Our post-Brexit economy will be anti-Thatcherite in another way. The Brexit Secretary, Steve Barclay, has promised a “skills-based” immigration system “where we can recruit on the basis of what our economy needs”. This runs into Friedrich Hayek’s classic objection: how can a central planner know better what the economy needs than countless individual employers with their detailed knowledge of their business requirements? Manpower planning is a rejection of free market Thatcherism.

Police officers during the anti poll tax riots, London, 1990

Brexit, then, seems to sit uneasily with two strands of conservatism – with both Oakeshottian scepticism of change and with some aspects of Thatcherite economics.

So what happened? The answer is that Thatcherism failed. It did so economically in that it did not produce a dynamic economy. In the 30 years since 1988 – the year when the top tax rate was cut from 60 to 40 per cent – real GDP per person has grown just 1.4 per cent per year, compared to growth of 2.6 per cent per year in the previous 30 years. And it also failed culturally. Thatcher hoped to create a society of men like her father – diligent, socially benevolent entrepreneurs. In fact, she created one of men like her son – chancers.

Just as politics after the mid-1970s consisted mainly of the question of how to respond to the failure of postwar Keynesian social democracy, so politics today is about how to respond to the failure of Thatcherism.

Brexit is one such answer. In his book Modern Conservatism, David Willetts says conservatism has always comprised two tendencies: a love of tradition and community as expressed by Oakeshott; and Thatcherite free market individualism. Brexit represents a shifting of the dial away from the latter towards the former. The desire for tougher immigration controls – which undoubtedly motivated many to vote Leave – is a yearning to protect traditional communities at the expense of free markets and the prosperity they bring. Brexit might seem like un-Oakeshottian change, but sometimes things have to change if they are to stay the same.

This isn’t to say that Conservatives see communities and free markets as opposites. In Adam Smith: What he thought and why it matters, Jesse Norman argues that “markets are sustained not merely by incentives of gain or loss, but by laws, institutions, norms and identities”. From this perspective Brexit is an effort to shore up notions of British tradition, identity and mutual obligation and thus reduce the rampant individualism that has corrupted capitalism.

All this translates surprisingly easily into Marxist terms. Marxists believe the capitalist state must fulfil two functions: to facilitate accumulation by for example sustaining capitalists’ confidence; and to legitimate inequalities by buying off discontent. In obeying the “will of the people” for Brexit, Theresa May is prioritising legitimation over accumulation.

Families protest against Margaret Thatcher’s Poll Tax policy

All this, however, might be too friendly a reading. There’s another one.

Free marketeers had hoped that lower top taxes, deregulation and the decline of trade unions would unleash a new economic dynamism. It did not – as a decade of stagnant productivity reminds us.

In response to this, many have adopted what Sir Karl Popper – ironically, one of Lady Thatcher’s intellectual heroes – called an “immunising strategy”. Rather than acknowledge the failure of their dreams, they’ve adopted the EU as a scapegoat: regulations (usually unspecified) and protectionism, they claim, are holding our economy back.

This is flat wrong. According to the World Bank, Germany exported $97.8 billion of goods to China in 2017, 4.5 times as much as the UK exported. It also exported twice as much to the US and almost three times as much to Japan. It is not membership of the EU that is holding back UK exports and – by extension – innovation and prosperity. Instead, the obstacles are internal – within the countless failures of British capitalism, such as an overly dominant, parasitic financial sector; lack of investment; inadequate management; the corrosive effects upon trust and engagement of high inequality; and so on.

Ideology, however, can blind us. Perhaps Brexit is the result of Thatcher’s epigones being unable to see that Thatcherism failed because British capitalism has done so.