I do not accept that recent events either constitute a failure of capitalism, illustrate a failure of the concept of deregulated markets in general or demonstrate more specifically that there has not been enough regulation of finance and financial services in recent years. I do not accept that government action has been required to save the world from the excesses of greedy bankers, and that recent events end the argument for limited government.
I shall continue to urge against these doctrines, but I accept that, without the support of any major political party, the great likelihood is that I shall [be on the losing side in] this intellectual debate. Perhaps I am too pessimistic, and I shall be pleased to be mocked in a couple of years' time with what follows if I am wrong. But, for now at least, I fear that these events will result in a new political settlement over the next twenty years, with significant national ownership of most of the banking system and national control (or "advice") over lending - the government guiding capital to projects that are "socially sustainable", "environmentally desirable", and "financially stable". The coming recession will see a large further rise in public expenditure, and probably further nationalisations of real economy firms, coupled with significant subsidies to the government's favoured businesses. Later there will need to be very large tax rises to pay off the debts accumulated during this period. Since government intervention has been "necessary" to preserve the capitalist order - to keep the rich rich, so that their investment can continue to flow to the rest of society and keep business functioning - in the future it will be the rich on whom the burden of repaying these debts must fall. At the very least this will mean a much much more "progressive" income tax system and a larger role for income taxes in the total tax take. It will probably also mean various wealth taxes.
Since the Conservative Party has supported the bailouts that provide the intellectual lynchpin for this later massive uptick in political socialisation, it will not be feasible later for us to return to a market-oriented stance. Markets cannot function without failure, administration, liquidation - these provide the Market's punishment for bad luck, mistakes and incompetence. If the government is going to rescue the system from its own errors, there is no Market. There will have to be another economic order, based on the "mixed economy". In a couple of decades' time, once there is a new generation of more radical politicians with divergent responses to these events - probably both from the left, arguing that the mixed economy fails to deliver prosperity and capitalism is impossible, so a more centralised economy is appropriate; and from the right that the bailouts were not necessary and that we must take the rough of capitalism with the smooth if we are to gain the longer-term prosperity that it provides - in perhaps twenty years (or maybe longer) there will be a free market experiment once again. But until then, there will be a new Socialist settlement, and it will be the task of the Conservative Party to oversee the mixed economy. I want to consider how we can apply Conservative principles to that task.
I have no fear of the Conservative Party being badly damaged qua political body by these events (though of course our cause, as we have understood it up to now, is fatally damaged (if my pessimism is justified)). On the contrary, it seems more plausible to me that it is Labour that will lose its raison d'etre under a Socialist settlement. The Conservative Party has flourished and dominated in managing the mixed economy before. We shall do so again on this occasion. But we shall need to significantly revisit those parts of the Conservative tradition from which we draw our principles of application.
The classical Whig position, under which I fall and for which I have argued, can no longer be our core. My own beliefs must be marginalised, and Whiggism must accept a secondary role, supporting and going along with other parts of the Conservative tradition. From the late 1990s I urged that the next governing Conservative coalition would be between the Whig and Paternalist traditions, with Whiggish methods used to further Paternalist goals. Latterly, this has become all the rage, and we have found it natural to talk of "market means to achieve social justice goals". But that has now past. Society will not trust market means.
In addition, Whiggish principles of tolerance and diversity must take a back seat. We have entered an age of moralising by politicians. Without markets - with a much greater use of direct decision over people's employment, over the allocation of capital, over what is produced - moral freedom within the economic sphere must decline. In order to function within the economy, there will need to be much greater moral homogeneity - we must achieve a settlement where even if we do not believe ourselves in the moral precepts of the economic order, we shall need to accept them if we are to participate.
So what Conservative principles might guide us in this new age? This will be an age of Tories, Paternalists and Corporatists, not Whigs. Here are some important guiding principles:
- Personal love and justice vs collective love and fairness. Markets are neither fair nor just. Reckless people sometimes get lucky and make huge fortunes, whilst hard-working prudent and wise people are ruined. Labour does not attract either its moral or even its productive worth. Wickedness of many sorts attracts mass participation and gives large rewards to its purveyors. Laziness drives innovation. And so on. A natural and likely result of a switch to a more mixed economy will be a rise in the doctrine that the economic order should be fair. Indeed, Gordon Brown urged as much in his recent reflective Telegraph article. But Conservatism does not particularly value fairness (contra George Osborne's recent speech), for fairness is intrinsically a matter of social equity, and is connected to doctrines such as equality of outcome or equality of opportunity, which Conservatives must always reject. But what can we offer in the place of fairness or collective love? Answer: personal love and justice. Conservatives value personal (not merely collective) love over equality, and hence a society in which people are encouraged to grant greater opportunity to their loved ones, not forbidden from doing so. And Conservatives recognise concepts such as individual property (held by the putting into law of natural right, not simply by dispensation from the State as ultimate collective owner of everything), whence justice may not always be fair (some people unfairly end up with more than do others, merely because they begin with property - and justice demands that this be so). Love and justice are always key Conservative concepts, but in a market environment they flow naturally. In a more mixed economy, the new Socialist settlement, they will need to be supported specifically.
- State religion as the inspirer of morality. Markets require a very limited set of market morals - specifically truth-telling, promise keeping, respect for property rights, a general sense that deals should be mutually beneficial, and other closely related concepts. But a more mixed economy, in which the determinants of the flow of capital, wage, and reward is more policy-driven, will need much more extensive morals to support it. We already see the condemnation of greed. This is only the beginning. Whence shall this new morality for the economic order be derived? Socialists will rely on collectivist philosophies combined with the personal integrity of officials. What will be our guide? It can only be state religion - a core element of the Tory component of Conservatism. This must also mean a new importance for Monarchy as the face of our religious order. Conservative morality must be urged upon all in Society - it will no longer be enough for it to underpin the institutions; it must animate the culture, also.
- Pragmatism and compromise. Gone now is the Conservatism of "the Lady's not for turning." We cannot afford ideological red-lines if we are to manage a Socialist settlement. We shall be dwelling in a foreign ideological country, and our right to be tolerated by that system and by our voters will depend on our ability to recognise that we cannot do things as ideological instinct might guide us, and we cannot create the crises that ideological digging-in would produce. Common sense, not pushing concepts to their limit, thinking short- to medium-term and not worrying too much about the really long-term impact must be our path.
- The strength, integrity and personal substantiality of our leaders. When we fight ideological battles, it is our ideas that predominate. The goal of politics will be to be right, and the Truth will be our greatest ally. Leaders will in that environment gain their substance from their expression of the ideas. But when we manage an alien system - when we are the pragmatic rulers of a Socialist settlement - our right to govern will not rest on the quality of our thoughts. Much more important will be the quality of those we offer as managers of the status quo. We will need politicians that the public wants to have as their rulers, rather than politicians primarily expressing the ideas to which the public wants to sign up.
- The quality of our nation. I am not a nationalist. But a key Tory concept, that will keep our society intact through an era of Socialism, in which the natural instinct might otherwise drive us towards greater and greater collectivism and hence to greater internationalism (e.g. there will presumably become ever-more-increasing danger, over the decades to come, that we shall chose to enter wholeheartedly into the Single European State), is British nationalism. Those like myself that favour the Whiggish constitution but are not cultural nationalists will have to hold our noses and go along with much cultural bunkum if our constitution is to survive relatively unscathed.
There are other Tory principles that may prove useful. But this will do for one post. Some of the above are somewhat inconsistent. This is inevitable given that we shall be managing an antithetical system.
Perhaps there is another way. Perhaps markets will recover dramatically, the government bailouts will be abandoned and Socialism will yet be averted. Happy day! But if not, I don't believe we can pretend that Conservatism can carry on as before. We didn't argue against Socialism, so now we'll have to manage it instead.
