Last Saturday, I was honoured to be the after-dinner speaker at the Conservative Renewal Conference in Windsor. What follows is based in part on what I said then, minus quite a few jokes.
"Ladies and Gentlemen:
It’s a great joy to speak at a conference devoted to ideas, and especially to conservative ideas. Ideas, not people, are what ultimately rule us. They are always in charge, for good or ill, whether we know it or not - this is what Keynes is hinting at in his famous line about today’s politicians being the slaves of some defunct economist. And ideas have real consequences. So it’s wise for us to reflect on them, and their limitations.
For some reason in recent months I seem to have acquired the reputation of being the Che Guevara of the modern Conservative Party. This is absurd, of course; I am the very opposite of a revolutionary. But it does mean that the press have started to scrutinise my public remarks with all the fervent enthusiasm of a group of Miley Cyrus fans at a twerking convention. Whatever “twerking” is.
The Greek tragic poet Aeschylus was not, as far as I am aware, a member of the Conservative party. Yet his astonishing trilogy the Oresteia—concerning as it does the cycle of blood-guilt and revenge afflicting the House of Atreus, the King of Mycenae—perfectly illustrates the conservative insight that the past conditions the present, and the present in turn the future.
Central to the Oresteia are the ideas of blood-guilt, transmitted down the generations from an original act of folly; and hubris, the individual arrogance which inevitably brings nemesis or retribution in its train. Atreus quarrelled with his brother Thyestes, killed his children and fed them to him, only to be killed in turn. His son Agamemnon has sacrificed his own daughter Iphigenia to get favourable winds before the Trojan War. Now he insults the gods as well and is murdered by his wife Clytemnestra. She is killed in turn by their son Orestes. Only a civil hearing, at which the case for and against Orestes is publicly heard and adjudicated, can bring the cycle to an end.
Ah, the media! You’ve gotta love ’em. To our intrepid fourth estate there are some very handy default positions with regards to their (i.e. our) elected representatives. You’ll see them in use for eleven months of the year. But especially in the dog days of August, when news and insight are in short supply, they are the gift that goes on giving.
They are as follows. First, MPs are a bunch of idle slackers endlessly troughing in Westminster at the taxpayer’s expense. Second, the only place they ever do any work is within Parliament itself, so they must spend as much time there as possible. Thirdly, the political summer recess is a two-plus month holiday in which MPs joyously desport themselves on foreign beaches, while the nation’s business goes unattended. Fourthly, MPs constitute a self-serving class who live in a political bubble entirely insulated from the concerns of their constituents.
The joy of this approach is that its claims are inconsistent with each other, and do not require evidence. So the attack can be switched from one flank to another with lightning speed; while the whole thrives on anecdote and gossip, of which there is rarely a short supply in politics. And of course, they encourage those in charge to push for ever-longer parliamentary terms, which keeps the gossip coming.
Many Democrats rage with disappointment at a President for whom they had cherished wildly unrealistic hopes; while the Republican party is pulled ever further apart by a toxic combination of personal rivalry and ideological zeal. The result is rancour, legislative gridlock and fragmentation.
American conservatism in particular has all but lost its way. Just as the failure of communism removed a great enemy which served to unite the political parties, so it has allowed American conservatism to collapse inwards under the competing pressures and ideologies of neocons and theocons, palaeos and Tea-partiers.
A modern Rip van Winkle might awaken after a sleep of several decades, with dim memories of what it meant to be a conservative: to believe in limited government, in respect for states’ rights, in a strong nation, in fiscal discipline, in free trade and individual liberty.
He would be astounded to see present day American conservatives defending federal intervention in local schools, the massive ramp-up in federal spending after 2000, the use of the military not to fight wars but for nation-building, the imposition of tariffs on trade, and - as the Edward Snowden case highlights - numerous intrusions small and large on the freedom of the citizen.
Moderate positions have been abandoned, and common-sense ones spurned. Hostility to illegal immigrants, to gay couples, to contraception. A constitutional amendment against abortion. After brutal massacres of children, a proposal to put yet more guns in schools, while refusing modest controls on assault weapons, or even background checks.
How has this happened? The US constitution is often lauded as the greatest expression of popular democracy. But in fact it also contains vital measures to restrain the direct expression of the popular will and inhibit partisanship. The genius of the American founders, and above all of James Madison, was to engineer a constitution that deliberately constrained and fragmented the power of government between state and federal levels; between executive, legislature and judiciary; and between House of Representatives and Senate. Each was thereby placed as a check and balance to another, forcing all into debate both as to the issues of the day, and as to the proper scope and limits of government itself.
These measures preceded the creation of party politics in America, led in the 1790s by Thomas Jefferson with Madison alongside him. But political parties developed in the US over the following two hundred years as the only mass institutions founded on the idea of citizenship itself.
The two main parties were historically broad and weak; and this was their strength. Through them different interests could be brought forward to political debate, and a broad consensus could be maintained. While never contemplated within the US constitution, parties are now essential to its effective operation. They are not purely private institutions; all Americans have a stake in their success, and a two-party system needs both parties fully at the table in order to flourish.
Yet ironically, if American parties have their origins in Jefferson’s thought, so too does modern Tea-partyism. For Jefferson was an Enlightenment radical, who believed that political parties should be the direct expression of the popular will.
For him elected politicians are delegates, receiving instructions from the people which are ratified and authorised through elections. Parties are the instruments of majority rule, working strictly through the rules and procedures laid down in the constitution. It is then but a short step to the beliefs that the constitution should be read entirely literally; that the electorate issues authoritative instructions; that a congressman who does not obey the electorate’s instructions should be deselected; and that certain positions are to be taken as litmus tests of ideological soundness and solidarity. The result is extremism, division and factional conflict—and a deep tension with the consensus-building incentives contained within the US constitution itself.
As so often, the thought of Edmund Burke offers a salutary contrast. Writing two decades before Jefferson, Burke was the first framer of the modern conceptions of a political party and of political representation, as well as being a principal architect of the Rockingham Whigs, the first proto-political party. So it is no surprise that for Burke the answer to factionalism lies within political parties themselves.
For Burke, a party is “a body of men united for promoting by their joint endeavours the national interest, upon some particular principle in which they are all agreed”. Unlike political factions, parties do not disintegrate when they lose power. They remain true to a core of principles, and continue to make the case for those principles even when out of office. They are an institutional corrective to personal, arbitrary or capricious government.
Properly functioning parties are thus the antidote to factional politics. They foster stability, allowing an orderly and peaceful transfer of political power after general elections. Because they must debate and publicly defend collective principles and policy, they bring a degree of openness and a focus on the national interest. They remove the need for political superheroes, allowing people of normal decency and ability to play a role in politics, and act as valuable recruiting and training grounds for new talent.
Most vital of all, genuine party politics demands that those who are elected act as representatives, not as delegates acting under instructions from their constituents. As Burke memorably proclaimed in his Speech to the Electors of Bristol in 1774, a representative’s “unbiased opinion, his mature judgement, his enlightened conscience” he should not sacrifice to his constituents.
Burke thus avoids the political traps created by Jeffersonian radicalism. But his views also suit the British constitutional tradition. For, as in America, there are two vital countervailing principles within the British constitution too.
The first is what we would now call a democratic principle: that political control ultimately derives from the consent of the governed, as renewed at general elections. The second is a constitutional principle: that the popular will should be moderated through longer-term institutions which are not tied to the electoral cycle, but which reflect other perspectives, other interests and other values, and which permit and encourage collective vision.
As Burke put it, “No legislator, at any period of the world, has willingly placed the seat of active power in the hands of the multitude. The people are the natural control on authority; but to exercise and to control together is contradictory and impossible.” Sovereignty in Britain thus resides not in the people, but in that great composite authority, the Queen-in-Parliament.
And Parliament includes the House of Lords. The Lords is a far from perfect institution, and the Government’s new measures to reduce the numbers and remove those with criminal records are to be welcome - as are those in my colleague Dan Byles’s private member’s Bill, based in turn on the work of David Steel and Helene Hayman. But as the American experience of Tea party radicalism shows, the need for constitutional mechanisms like the Lords - able to bring expertise, reflection, diverse opinions and a long-term perspective to politics - is stronger now than ever.
Tim Worstall is a good man, despite a somewhat Antipodean approach to public debate. He has taken me to task with his usual shyness and charm for an article I wrote last week in the Telegraph about the duties of directors and the idea of stewardship. In his words, “With Jesse Norman as a Tory MP why bother having a Labour Party?”
Tim’s standard operating procedure is (a) read something he doesn’t like, (b) reach for his shotgun, and (c) blow the end of his own foot off. Here’s a previous example, in relation to something I didn’t say last year about the House of Lords. Those of a tender disposition may wish to look elsewhere.
It is one of the deformations of the age that economic libertarians often denounce real conservatism as a socialist doctrine, and this is a good example. Indeed, I could offer a point-by-point refutation of Tim’s piece, and show in detail how my insistence on stewardship and the importance of shareholders exercising proper ownership has its (deeply conservative) roots in the thought of Smith and Burke. (Hint for enthusiasts: look at, for example, Jensen and Meckling on the modern (Coasian) theory of the firm as a nexus of contracts; and e.g. Bob Clarke’s essay in Pratt and Zeckhauser’s Principals and Agents on the limits of agency and fiduciary theory. My book on Burke may be of interest.)
But as I was contemplating this dreary task a small scenario floated into my mind, which may do the job better than I can. Needless to say, it is a work of fiction, an homage to SJ Perelman, and does not represent my view of how multinational businesses actually conduct themselves...
Scene: the offices of MegaWidge, Inc., a global manufacturer of widgets. Tim, Doug and Ed are in the final stages of preparing a major presentation to the board. A couple of dozen lawyers and accountants are in attendance. All is not well.
Tim: OK, so have we got this straight? New Cayman Islands subsidiary?
Tim: Lichtenstein holding company?
Tim: Transfer pricing agreements?
Tim: IP licensing contracts?
Tim: And our effective corporate tax rate is?
Doug: Two per cent.
Tim [rapidly reddening]: TWO PER CENT??? What do you mean, two per cent?
Doug: Well, what would you prefer? Five per cent? 15 per cent? We can make it any number you like.
Tim: Doug, haven’t you understood anything? As Milton Friedman says in his famous article “The Social Responsibility of Business is to Increase its Profits”, we have a responsibility to shareholders to make as much money as possible. Provided we keep a lid on the cost of this lot [looks meaningfully at advisers] that means not paying anything in tax at all. We would be in BREACH of our FIDUCIARY DUTIES if we do. We could be SUED.
Ed: Er, Tim?
[The others ignore him.]
Doug: So sorry, Tim. Yes, of course. I forgot.
Tim: That’s better. Now what about the employees? Minimal contractual rights?
Tim: Minimum wage in all jurisdictions?
Tim: Ancillary benefits? Offshoring?
Doug: Check and check. Though they do get the Christmas turkey.
Tim [panting with anger]: THE CHRISTMAS TURKEY???
Doug: Or goose, or Quorn Alternative Winter Festival Treat. We try to think of everything.
Tim [facepalm]: DOUG!!! THE SHAREHOLDERS!!! FIDUCIARY DUTIES!!!
Ed: Er, Tim?
[The others ignore him.]
Doug: Sorry again … forgot.
Tim: … IF we can now get back to work. Finally, our environmental profile. Minimal clean air compliance?
Doug: [doubtfully]: Well, we do have one or two offices with their own recycling schemes. Those cost a bit.
Tim: [apoplectic with rage]: FRIEDMAN!!! THE SHAREHOLDERS!!!
[Doug hides under a chair.]
Ed: Tim, the shareholders never do anything. That’s the problem - they’re bad owners. If they don’t like a company they just sell the shares. But capitalism relies on effective ownership - that’s Adam Smith’s point about the weakness of joint stock companies. This isn’t real capitalism.
Ed: And isn’t Friedman really objecting to the idea that managements might arrogate to themselves, without shareholder approval, the social responsibilities of the state?
Ed: And doesn’t Friedman himself say in the same sentence of the article you quote, “… while conforming to their basic rules of the society, both those embodied in law and those embodied in ethical custom.”
Tim: Er, yes.
Ed: So even according to Friedman, a company might properly decide, according to “the basic rules of society” that it didn’t merely want to comply with minimal standards in the amount of tax it paid, or the way it treated its employees or the environment?
Ed: And it might properly choose, according to what Friedman calls “ethical custom”, to do more in each of these areas on moral grounds?
Ed: Which is almost exactly what Section 172 allows for?
Ed: So that section of the Companies Act 2006 fits with Friedman’s own conception of corporate responsibility?
Ed: But you’ve described it as “one of the idiocies of the last Labour government”?
Ed: So Friedman’s view is idiotic socialism?
Tim [flustered]: Yes, er, no.
Ed: And you in fact reject it?
Tim [brain explodes]: No… yes, I mean, er…. AAAAAARRRGGGHHH!!!
[Tim starts running around in circles and waving his arms. He is gently led away.]
Ed [to the advisers]: You’re fired. Throw these board papers out. Radical change of approach--we’re going to focus on making and selling products we can be proud of.
It’s been an extraordinary couple of weeks. Not just because of the Lions’ thumping victory over the Wallabies and Andy Murray's triumph at Wimbledon, though these are cause for celebration enough. No: this is the fortnight that revealed a sea change in the whole nature of British politics.
The post-war years fall, broadly, into three phases. The first was one of managed decline, in which postwar Britain retreated from empire, built the welfare state and sought full employment, at the cost of periodic balance of payments crises, falling competitiveness, and escalating union power and inflationary pressures. That phase was decisively ended by a great reckoning, in which Mrs Thatcher’s government forced the country to acknowledge and address the sources of its decline.
The settlement that resulted was and remains politically controversial, but its main domestic features - controls on union power, a focus on defeating inflation, privatization, opening up the financial sector to competition, centralization of power - were not reversed, or indeed seriously challenged, under Labour. Quite the opposite: the whole point of New Labour was that it accepted the terms of trade laid down by Mrs Thatcher.
But the economic inheritance Labour received from the Major government was so strong, and global monetary conditions so favourable, that it massively overreached itself. Financial supervision was weak; banking debt was allowed to rocket upwards, increasing by 250 per cent in defiance of a 40-year consensus; private debts ramped up; public spending soared. Before the financial crash of 2008, at the height of the boom, when the economy under Gordon Brown should have been running a large surplus, it in fact had a budget deficit of 3% per cent When crisis hit, it struck a weakened and badly over-extended economy, whose golden inheritance had been squandered under Labour.
Initially. the Coalition had anticipated that the resultant economic mess could be largely conquered within five years. This reflected more hope than experience; as a Policy Exchange report written before the 2010 election pointed out, similar recessions induced by financial shocks have historically taken six to ten years to work through. When I reminded the audience at a Spectator debate of this a few months ago, many were plainly aghast. But as the past fortnight has shown, for the UK today - very open, very unbalanced, very indebted - a full recovery will in fact take longer still. The spending review was an acknowledgement of this, pushing fiscal stringency into the next parliament, and forcing Labour to accept the current spending envelope and recognise economic reality for the first time.
Then last week the Cabinet Secretary gave a speech to civil servants in which he explained that it might take two decades to renew the economy: “This is not a two-year project or a five-year project. This is a 10-year project, a 20-year generational battle to beef up the economy in ways that we have not seen for many, many decades.” In other words, we now face a second great reckoning, a second fundamental shift in the nature of post-war politics. What can we say about it? Should we welcome or fear it?
The first thing to note is that this change is public, well understood and imposed by the facts of economic life. Mrs Thatcher’s task was hampered by the fact that her diagnosis - that British decline was not inevitable and could be reversed - was, initially at least, not widely shared even within her own party. By contrast, anyone outside politics who doubts the need for austerity today can simply be referred to the Red Book. So lower state spending is not merely here to stay; people understand why it is. This means they can and will change their habits and expectations accordingly.
The result, as recent changes in British social attitudes make clear, is that the country is becoming more small-c conservative. This means that for the first time since 1945, and arguably some time before then, the possibility of big increases in state spending no longer hangs over British politics. Gone, for a while at least, is the pushmi-pullyu by which governments were able to cop out of economic policy by pumping up demand, only to have to retrench ingloriously thereafter. Instead we have, for the first time in six decades, a long-term hard budget constraint: a limit on the extent to which governments can woo voters by what to 19th Century eyes would be treating on the grandest scale, offering money to favoured constituencies and special interests in return for their political support. In the immortal words of Liam Byrne, there is no money left.
Meanwhile the cost of public services will continue to rise, forcing ever more difficult—and increasingly cross-party—decisions about who is to benefit from public spending, and by how much. These changes have been brilliantly discussed in a recent article by Janan Ganesh. As I set out in Compassionate Economics, the key underlying driver is what has become known as Baumol’s Cost Disease. Think of it this way: even if a midwife could see 50 young mothers a day in pursuit of ever-greater efficiency, would you (or they, or she) want her to do so?
But if all this is true, if for a decade no party will be able to promise a lot more state spending, then what is the point of the Labour party? Fabianism is dead; while the idea of the party as the mouthpiece of the working man has been grievously damaged by its dependence on the unions, and especially on Unite, a union which, as the Falkirk scandal has reminded us, is dedicated not to the interests of its members, but to its own political power. This second great reckoning means that Labour needs to return to its pre-Fabian past, as the tiny band of Blue Labour conservatives around Ed Miliband, such as Jon Cruddas. Maurice Glasman and Stewart Wood, are pushing for it to do. But that will be a tortuous and long-term process.
If Fabianism is dead, however, the financial debacle after 2007-8 has also left extreme liberalism in crisis. So what remains? The opportunity exists for Conservatives to fill what one might term a Burke-shaped hole in domestic politics - and in particular to address the three tasks of reforming public services; enabling Britain's vast array of independent institutions to cope with rapid social change, without undue dependence on the taxpayer; and rekindling the British industrial spirit, the spirit of wealth creation and entrepreneurial energy.
These are what we need to win the Prime Minister’s “global race”, and it is hugely to his credit that his focus is so clearly long-term, and so ambitious for the country. To a people used to public spending, the next decade or more will not be easy. But there are real reasons for hope, even optimism. The past fortnight also saw the death of the great Ken Minogue, whom I first met at a conference on social choice in Warsaw in 1990, and whose work later I published in a book on Michael Oakeshott. Ken used to say “Life is a better teacher of virtue than politicians”. So it may prove in this case, once again.
Let’s be clear: the G8 Summit last week was a mini-triumph. It had the lowest levels of protest in recent memory. The headlines were dominated by the Prime Minister’s determined push for a peace conference for Syria, but there were also important steps forward on a transatlantic free trade area, and on tax and transparency.
One might have expected even Dame Polly Toynbee of the Guardian to be impressed by the announcements on tax. Alas, none of it. To which one might ask, what does David Cameron have to do to get a fair hearing? Polly is deeply confused about tax, to be sure. In her haste to get the tax take up, she deliberately adopts the intellectually calamitous tactic of equating taxation with the benefits and public services which it funds (I have discussed this fallacy previously in this column). That makes intelligent debate about the merits of each hard if not impossible.
But she is right about one thing: on tax as on everything else, Labour’s position is a horrible mess. This is the party that abolished the 10p tax rate while in office, clobbering the poorer taxpayer; and which only put up the top rate as an electoral ploy, after more than 12 years in government. And guess what? The absolutely predictable, and predicted, result was gigantic levels of legal tax avoidance.
In the early 1990s the late, great Robert Oakeshott asked me to serve on the board of his pioneering advisory organisation, Job Ownership Limited (now the Employee Ownership Association). I edited a pamphlet on how to set up a co-op a few years ago; have pushed for better recognition of mutuals in parliament and in the press; and have even helped to set up an Industrial and Provident Society, the grandiosely named Conservative Co-operative Movement, to explain and advocate the importance of co-ops to fellow Tories.
In my view, co-ops are splendidly conservative institutions. They generally spring from local soil, fired up by local energy, and positively teeming with small-c conservative values of thrift, entrepreneurship, and community self-help. Their founding Rochdale Principles give them a broad ethical basis far removed from modern state-first socialism. They belong to no political party or creed.
But to me, indeed to all co-op-ites, there is but one Everest, one institution which dominates the UK landscape. That is The Co-operative itself, the Co-op: the retail behemoth whose businesses stretch from banking to funeral services, from food retailing to pharmacies.
The Co-op has 340 bank branches, 2,800 stores and 7.2 million—yes, 7.2 million—member-owners; last year it had sales of £13.5 billion, and just under 100,000 employees. By its own estimation it accounts for around 80% of total co-operative activity in the UK.
The Co-op has struggled in recent weeks from a bad loan portfolio following its acquisition of the Britannia Building Society. But over the years it has been a pioneer in many areas of its business: the first UK retailer to forbid testing of own-brand products or ingredients on animals; the first UK bank to introduce a customer-led Ethical Policy as to which companies or countries it deals with; the UK’s first full internet bank. It takes the responsibility of funding and leading the co-operative sector in the UK very seriously, and rightly so.
But there’s one other fact about the Co-op which is less often mentioned—one “say it ain’t so” fact which undermines this whole great picture, and indeed raises issues of serious public concern.
For the Co-op is not just a retailer; it is a major political player in its own right. Over the past ten years it has given £6,187,788 to a British political party, the Co-operative Party, and a further £355,857 to the Labour Party. There are currently 32 Co-operative Party MPs in the House of Commons, 17 Co-operative Party Members of the House of Lords. It has five MSPs, nine AMs, and hundreds of councillors around the country.
This would matter less if the Co-operative Party were an independent party in its own right, which contested elections alongside the other parties. But it is not; on the contrary, it is umbilically linked to Labour, and every single one of these politicians is a Labour party member.
Seventeen members of the shadow front bench are members of the Co-operative Party, including Ed Balls, the Shadow Chancellor (who in 2012 received £50,000 in financial support from the Co-op). You cannot join the Co-operative party if you are a member of any political party other than Labour.
These political contributions raise profound questions not merely about the Co-operative Party, but about the Co-op itself.
The first question relates to how they are financed. As the Co-op’s 2012 Annual Report makes clear, these contributions are charged as operating expenses, which eat into profits and so reduce the dividend to members. But, one might ask, how many of the Co-op’s 7.2 million members are aware that they are paying for very large contributions to the Co-operative and Labour parties?
The second question is about transparency. The Co-op prides itself on its ethical values, and in particular on the Rochdale values of openness and honesty. In its words, “Ultimately, our aim is to be the most socially responsible business in the UK, offering our members and customers not only value, but values… We are taking ethics to the next level.”
That being so, you would expect it to be upfront and open about spending over £6 million that would otherwise go (net of tax) towards members’ dividends on contributions to political parties over the past decade.
Unfortunately, the opposite is true. The first mention of the Co-operative Party in the Co-op’s 2012 Annual Report comes on page 31, in the small print; the phrase occurs again later in the small print on page 51, alongside the Labour Party; and that is it. If you apply to join the Co-op, you will search its membership forms and papers high and low for a mention of its political contributions, its huge direct and indirect commitment to the Labour Party, and for details of how these contributions are paid for.
Indeed, the only reason why the Co-op can make political contributions at all is because it is not in fact obeying the original Rochdale Principles, which insisted on political and religious neutrality (they were changed in 1966). And when you think about it, political neutrality is an obvious prerequisite in any organisation that claims to embody community values.
The third question is where the money goes. How much of the Co-op’s £6,187,788 actually goes to subsidise the Labour party? The answer seems to be all of it, since the Co-operative party does not operate in any genuine way independently of Labour. And the Co-op seems to get a poor deal for its money; it may have given Ed Balls £50,000 last year, but I struggle to recall Mr Balls welcoming any of the measures the government has taken to assist co-ops and mutuals over the past three years—or indeed doing anything else much to help co-ops. Perhaps as Shadow Chancellor he will now make the case for the ailing Co-op Bank to be exempted from capital adequacy requirements?
A Co-op Area Committee member, Dave Boyle, attempted to raise some of these issues recently in the Guardian saying "The overwhelming majority of [Co-op] members are blissfully unaware that the Co-operative Party even exists, or that it – and thus the Labour Party – are funded via profits from their purchases in the shops. It's an arrangement that has much in common with the way trade unions funded the Labour Party, until legislation required them to secure the direct consent of their members." Unfortunately, Mr Boyle’s call for a degree of independence for his party from Labour was dismissed by the (Labour) Chair of the Co-operative Party, Gareth Thomas MP.
But he puts his finger on the problem. How many Co-op members know of these payments? A tiny minority. Why don’t they know? Because the Co-op, despite its huge public commitment to ethical business, has decided to ignore the Rochdale principles of honesty and openness, and keep them in the dark.
How many Co-op members would approve of these political contributions if they were asked? No-one can say; it may be a large majority. But the parallel Mr Boyle draws with the trade unions is an accurate one. What is needed now is for the Co-op to level with its own membership, and call a ballot on the issue.
Several years ago, Air New Zealand hired thirty people to act as “cranial billboards”. Their heads were shaved and given temporary tattoos with the words “Need a change? Head down to New Zealand”. The price for two weeks of cranial advertising: a round trip ticket to New Zealand worth $1,200, or $777 in cash.
How do you feel about this? Is this perfectly fair, a straight market transaction, or has something gone wrong here?
If you think cranial billboards are OK, how about prison cell upgrades? In Santa Ana, California, non-violent offenders can pay for a clean quiet cell away from the non-paying inmates. The price? A mere $82 per night.
How about paying someone to stand in line for a Congressional hearing (c. $60) or to queue for a free ticket to see Shakespeare in Central Park (up to $125)? Or paying students to do well in exams, or HIV-carrying mothers to have long-term contraception? Or fighting foreign wars by proxy, through the private security contractors which now outnumber the American troops in Iraq and Afghanistan?
These examples, and dozens of others, come from Michael Sandel’s recently published book What Money Can’t Buy. Sandel teaches political philosophy at Harvard. His course on justice has become one of the most widely viewed lecture series on the web.
He gave the Reith lectures in 2009, has been feted in the Guardian, and spoke at the Labour Party conference last year, so you might be forgiven for thinking that he is a man of the left. But you would be wrong: in fact this is a profoundly small-c conservative book, which should be read by all Conservatives.
As Sandel shows, there is now frighteningly little, at least in the USA, that money can’t buy. Whole areas of human life (and indeed death) have become subsumed by economic thinking, priced and marketised. The result, he argues, has not merely been to upend existing cultural norms and expectations; it has fed into, and in turn been fed by, the increasing difficulty of having an intelligent public conversation about serious issues.
In his words: “At a time when political argument consists mainly of shouting matches on cable television, partisan vitriol on talk radio, and ideological food fights on the floor of Congress, it’s hard to imagine a reasoned public debate about such moral questions as the right way to value procreation, children, education, health, the environment, citizenship and other goods…
“The problem with our politics is not too much moral argument, but too little. Our politics is overheated because it is mostly vacant, empty of moral and spiritual content. It fails to engage with big questions that people care about.”
Of course, the USA is not the UK, and public discourse in this country is not, or not yet, as truncated and rancorous as it is in America. And many people, including many Conservatives, may wonder whether there is really much of a problem here.
After all, what’s wrong with people exercising economic choices freely? Doesn’t the Efficient Markets Hypothesis show that this is both maximally efficient and maximally good for human welfare? Would anyone want to return to a world of national state-owned telecoms or airline monopolies? Haven’t we learned from the collapse of communism that capitalism and free markets are the only game in town?
And there may be more specific cause for concern. After all, wasn’t it Margaret Thatcher who opened up cosy cartels in finance, freed labour markets and privatised who industries? Many on the left are only too happy to try to pin the blame for our present discontents on the liberalisation of the 1980s.
However tempting these thoughts may be, in fact they perfectly exemplify Sandel’s argument. Yes, we should have a general preference for freedom of choice. But, as I have argued in my paper on Crony Capitalism, that doesn’t mean we are forced into a neo-liberal or libertarian conception of free markets, in which humans are economic automata, culture is ignored and utilitarianism rules.
Yes, Mrs Thatcher liberalised markets and busted cartels. But this came at a time when marginal tax rates were as high as 83%, and you could not take more than £50 out of the country without a permit. We can be sure that Mrs T would have vigorously denounced the way in which financial markets and debt were allowed to run rampant after 1997.
In other words, these issues are complex and serious, and demand serious and careful public consideration. We can’t address them by swapping slogans and soundbites, and the fact that so many people in politics and the media seem happy to do so does not merely miss that opportunity; it evinces a profoundly insulting attitude to the general public, which further undermines public confidence and trust.
By contrast, Sandel’s book sets its face against neo-liberalism, and celebrates human instincts, human practice and human culture. To be sure, its project is still incomplete. In particular, it does not give us a general account of why some markets fit our moral intuitions, and some do not.
A wider picture would also discuss the fascinating psychological literature on how images of money and wealth prime humans to become more selfish and individualistic, and it would address how different moral reactions are centred on ideas of autonomy, community and the sacred.
But even as its stands Sandel’s book is profoundly Burkean, and profoundly conservative. Its wealth of examples sets the scene for the much wider debate we need. And for that we should be profoundly grateful.
Conservatives always get worked up about high taxes, and they are right to do so. The effect of any tax is in principle to add to the costs of the object taxed, and so to reduce the amount of it. Tax sales, and sales will be lower; tax income and income will be lower; tax employment, and employment will be lower. And all the more so when taxes are high.
Then you have the moral effects of high taxation. Take away too much of someone’s marginal income, and you penalize them for working. You take away part of their freedom, and so the power and duty to act responsibly. You move them a notch away from autonomy, and a notch closer to dependence on others, or on the state.
It’s important to be clear about this, especially since those on the political left often blur these issues by deliberately running together taxation with the public spending which it funds. An effective and fairly redistributive tax system is a vital part of any successful nation state. You can in principle fund a given level of public spending through high taxes or low taxes—the arguments above are arguments for low taxes, not for no taxes and no public spending.
But there is another side to the story. High taxes are objectionable because they reduce people’s disposable income, but the same is true of high utility prices and the price of petrol. It’s illegal not to pay tax owed; but everyone needs affordable electricity, heating, water, and the ability to get to work, or to public services. And the issue is not just about the least well off. It reaches right up the income spectrum.
Here’s a rather telling story from my own constituency. A local builder in Herefordshire restored two houses last summer. Each took about six months to do up. Each had a gas supply for heating, and a new boiler fitted at the end of the renovation.
House One was on a normal tariff. One unit of gas was consumed when the builder tested the boiler. Cost: £1.86. House Two was on a prepayment meter. Three units of gas were consumed when he tested the boiler. The cost was £56.12, including 145 days at 35p/day, or £51.54 for a daily standing charge.
I raised this with the power company concerned (I won’t mention them now, but they’re welcome to get in touch). Their response was fascinating: to argue that this was all OK because average prices were the same for those with prepayment meters and those without.
That response misses the point, because an appeal to the average is scant consolation to poorer householders on prepayment meters, who are almost certainly paying over the odds. And anyway, the whole point of prepayment meters is to avoid accumulated arrears: it is that people pay for usage when incurred, and when they have the money to pay for it. You’d think the power companies would know that by now.
The wider issue would matter less if real wages were growing. But here’s the kicker: median real wages stopped rising in 2003. Indeed, average disposable incomes fell over the following five years in every English region outside London.
Yes, you read that correctly—the year was 2003, not 2008 or 2010. In
other words, real wages of 50% of the population stopped growing
halfway through the Blair-Brown years, during what was supposed to be
the longest sustained period of prosperity in Britain’s peacetime
As I pointed out in Compassionate Economics, that apparent prosperity was a mirage, built on four unsustainable booms: in government spending, in immigration, in house price inflation and in personal debt. Labour came to power with the greatest recent economic inheritance of any government, at a time of globally low interest rates and low inflation, and they blew it. And that was before the crash.
The Conservative Party in government has done a huge amount already
to help people on lower incomes to manage the cost of living, from cuts
in fuel duty to support for OFGEM’s new Retail Market Review of energy
prices to increases in the tax threshold (yes, originally a Conservative
idea; see Maurice Saatchi’s important pamphlet of 2001. And backbenchers have played their part, notably the superb Robert Halfon’s fair fuel campaigns.
But we can do more, and we can talk about these issues more. Ideas, please!
Jesse Norman is the Member of Parliament for Hereford and South Herefordshire. His biography of Edmund Burke will be published in May. Follow Jesse on Twitter.
Bush certainly branded his first administration with the same label, especially before 9/11. But this was a serious misnomer, for in fact his approach had the twin drawbacks of being neither compassionate nor conservative. It was not compassionate: indeed, its main promoter, John DiIulio, fell foul of his colleagues in the White House in 2001 by insisting that money be directed to black and Latino churches, infuriating white Evangelicals. And it was not conservative, as was shown by the extension of federal influence into local schools through the No Child Left Behind Act of 2002, and the extraordinary ramp-up in federal spending that took place even before the financial crash of 2008.
Moreover, Bush’s compassionate conservatism was a moralising doctrine, which assumed that society’s basic moral standards were in decline and set the federal government the task of improving them. And, as a slogan, it lacked a deeper theoretical justification that could be used as a basis for long-term policymaking. The effect was that it quickly came to seem merely an electoral expedient, not a genuine contribution to a wider political and cultural debate.
Properly understood, compassionate conservatism is something utterly different. To find its true modern roots we must look much further back, to the mid-eighteenth century, and to Edmund Burke and Adam Smith. The two men were friendly, without being especially close. But they shared a remarkably similar cast of mind: Smith once remarked that "Burke is the only man I ever knew who thinks on economic subjects exactly as I do, without any previous communications having passed between us.” Much the same was true on other subjects as well.
Burke we will leave to another day. But Smith’s founding role should not be underestimated; and in morals as in economics, he is far more conservative than is often recognised. He saw himself not as an economist but as a moral philosopher, as a legal scholar and (in effect) as a social scientist. Thus he dealt with economic problems and ideas, but only in their wider social, historical and political contexts. And he certainly did not believe that human beings were purely selfish. Indeed he wrote The Theory of Moral Sentiments in 1759 to argue for the quite different and opposed view that compassion or “sympathy” was the psychological basis of personal morality.
The Theory of Moral Sentiments opens with the following lines:
How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it. Of this kind is pity or compassion, the emotion we feel for the misery of others, when we either see it, or are made to conceive it in a very lively manner.
In the Smithian view, personal morality and social norms arise from a process of imagining and reconstructing the experience of others. What matters is not compassion as pity, but compassion as fellow-feeling. Smith, then, is one of the founders of compassionate conservatism.