The newly-appointed shadow business secretary Ken Clarke gave his first speech in his new post today, to a conference hosted by the think-tank, Reform, at the London Stock Exchange.
In typical Ken style, he opted to speak off the cuff for 15 minutes, so no text was released in advance (or afterwards, for that matter).
However, I have managed to obtain a transcript of several key passages, which are reproduced below.
The current crisis is not the end of free markets
“My reaction to this crisis is that I have not lost my conviction in the values of capitalism. I believe in free markets, free trade and globalisation, which I think have collectively led to some remarkable changes in living standards here and across the world in the last twenty years.
“We are going to have to argue that case. The reaction of many people to this crisis is that we have to challenge the fundamentals, that the markets as a whole have been proved to be wrong. You will find that argument deployed across very wide fields. It is the wrong reaction to what is a failure of banking, a failure of credit markets, a failure of money markets and failure of regulation.
“This, then, is not the end of free markets, but it must be the end of free markets without effective regulation of banking and financial services.”
The problems with regulation
“Everybody managing or investing in an enterprise in this country will tell you that a key problem is regulation. The tripartite system turned out to be a mistake and the FSA has been completely useless at regulating banking. But that does not mean that other sectors of industry should be excessively regulated. Indeed what was wrong with banking regulation was not the lack of quantity of regulation - all kinds of box ticking nonsense went on - but what was wrong was the quality of the regulation.
"Huge amounts of trivia and process were explored in great detail without the big questions of risk management being challenged and the banking fraternity being looked in the eye and being asked to explain the business models that they were using and whether everyone totally understood what they were exposed to off balance sheet in the securitisation business.
“The regulator waited to read in the newspapers that people were queuing around the block outside Northern Rock and did not appear to have enquired about the business model.
“But the excessive regulation of the rest of the UK economy should not be off the agenda. All those Fabians and other natural bureaucrats who say that more regulation is required in every sphere of activity are wrong.
“It still matters that it takes twice as long to set up a company in this country as it does in France. It still matters that everyone managing a company complains to us about the burden, the cost and the conflict between different regulations and we have to address that.”
Devalued sterling
"Rapid movements in exchange rates are always disastrous... There are upsides but, on this occasion, we've got most of the downside. The upside, in theory, is that our exporters' goods become cheaper for customers - but that's assuming that there are customers. What's happened is just that our exports are cheaper, imports are more expensive, and our trade deficit remains defiantly the worst since the 17th Century."
Jonathan Isaby
Yawn, isn’t he clever telling us all what we already knew, I wonder who he thought he was informing with this information, or is it just talk for those who like the sound of his voice!
I take it he said more, I hope it’s better than what is quoted above.
On another thing related to Mr Clarke,
I believe I heard right this evening when a reporter said on sky news that Mr Clarke had said “now is not the time for strikes”.
I think he is SO wrong! For those like me, against the EU, now is exactly the right time for these strikes!
Ok bring it on!!
Posted by: T. England | February 02, 2009 at 18:42
Nigel Farage is calling for Lord Mandelson to resign;
http://www.ukip.org/content/latest-news/908-mandelson-has-to-resign-says-farage
Posted by: michael mcgough | February 02, 2009 at 18:50
I feel sorry for Ken Clarke if he feels he is forced to make this sort of a speech.
The British people, unlike the blogosphere in general, aren't interested in speeches on abstractions and theories and the black-and-white battle of whether "the free market" trumps "socialism" and how far or how close David Cameron positions himself to Thatcherism.
They want to know what is going to be done, with specifics, and not reiterations of dogmas and ideology.
Posted by: WHS | February 02, 2009 at 18:50
"I think have collectively led to some remarkable changes in living standards here and across the world in the last twenty years."
Who has benefited here Mr Clarke? May be the people who are in your circle, but I suspect that the 50% of the people at the bottom would differ with your claims.
Posted by: Iain | February 02, 2009 at 19:01
" or is it just talk for those who like the sound of his voice!"
It's a lesson in Conservative thinking for the mass of disaffected Labour types who need to hear and understand the gospel.
Remember we are no longer just preaching to the converted.
He does speak very well indeed and he will woo many a pinko-lady away from the very wrong path of socialism. This is what Ken is good at, talking a good talk. I was happy with what he said, and it needs to be said over and over. Some of it will sink in.
You were not the target audiance clearly.
Posted by: The Bishop Swine | February 02, 2009 at 19:07
“now is not the time for strikes”.
Now is never the time for wild cat strikes. It's never the time for illegal secondary picketing.
Even the Legal strikes that are the result of democratic ballot, are never good for Britain.
Posted by: The bishop's just and fair wife. | February 02, 2009 at 19:11
Nigel Farage and Lord Mandelson are on Newsnight tonight.
Posted by: michael mcgough | February 02, 2009 at 19:39
Clarke is right on the money when he says the regulation debate ought to be about quality rather than quantity - simply saying we need more regulation is meaningless drivel.
It's also good to a see a politician getting to grips with diagnosing what happened in the financial markets re: risk exposure and business models.
Posted by: Adam in London | February 02, 2009 at 21:11
Chimes with what Cameron said about 'moral capitalism'.
Business Secretary seems to be an excellent role for Clarke. He has the oppurtunity to expound on topics on which he has an enormous amount of experience, without allowing his views on Europe (views with which I largely agree, by the way) to create division in the shadow cabinet or the party.
More of the same please, Ken.
Posted by: bobchilts | February 02, 2009 at 21:11
Trade and markets certainly do provide the opportunity for prosperity and better living standards. However that can only occur if there is an even playing field. Our producers cannot compete with sweatshop labour and for this reason we need a wage-equalization-tariff so that British business isn't seeing wages undercut and the British consumer is awarded genuine choice. The choice of home produced goods or imports.
On the matter of exports, we do need a viable export capacity to support the economy at times when domestic demand is slack, but an export capacity that isn't reliant on scuppering our currency.
Our economy must be based on balance, this is the only way to iron out the swings of boom and bust. How we achieve this balance is a matter for serious debate.
Posted by: Tony Makara | February 02, 2009 at 21:17
Note Clarkey did not say improvements in living standards but'changes in living standards'.
I expect that if you are an unskilled worker sending your children to schools enriched with diverse cultures and welcoming the help given to our 'new communities' you might think it was a change downwards.
Posted by: Anthony Scholefield | February 02, 2009 at 21:32
Note Clarkey did not say improvements in living standards but'changes in living standards'.
I expect that if you are an unskilled worker sending your children to schools enriched with diverse cultures and welcoming the help given to our 'new communities' you might think it was a change downwards.
Posted by: Anthony Scholefield | February 02, 2009 at 21:32
"Our producers cannot compete with sweatshop labour and for this reason we need a wage-equalization-tariff so that British business isn't seeing wages undercut and the British consumer is awarded genuine choice."
Makara, you are a twit when it comes to trade issues. It isn't wages that are important, it is productivity. Productivity is raised by the amount of capital that is added to labour. British workers have lots and lots and lots of capital added to their labour as compared to people in low wage countries.
Thus the productivity of British workers is higher and so are their wages.
If you're not prepared to learn this most basic fact about comparative advantage, why do you keep posting on trade issues? Couldn't you do something more useful or interesting? You know, polish your collection of bowling trophies or something?
Posted by: Tim Worstall | February 02, 2009 at 21:45
Mr Worstall, not well versed in the art of debate are you? You really need to control your deteriorating nerves.
The fact is, you know that the free-traders have had their day and that we are now entering a new economic era. The unfettered free-market ideology you subscribe to has collapsed, even senior Conservatives now recognise this. Your system of beliefs is moribund.
Those who don't believe that wages are a factor should consider why imports from the East have been so cheap, why British companies hire Indian call centres and the labour of Indian seamstesses? Of course sweatshop wages give certain economies the advantage and destroy industries in the countries that don't pay exploitative wages.
On the matter of comparative advantage, one has to ask whether we are running our economy for the benefit of China/India or for ourselves. Are we not a nation state?
If nations follow a route of specialization it leaves each nation vulnerable because it is top-heavy in a specific economic field, after all we have seen the collapse of Britain's top-heavy service sector with the collapse of the credit that fueled it.
National economies have to be balanced, particularly where there is a large population. The idea that each nation can develop a niche economy, specializing in a specific field, be it manufacturing or services is unsustainable.
It is a globalist's fantasy.
Posted by: Tony Makara | February 02, 2009 at 22:18
No one has done more than Ken Clarke to burden Britain with regulation, by his preventing any serious opposition to the EU from breaking out in the Conservative Party.
Now he wants to sound off enraged at the mess he has created.
Pitiful.
Posted by: Tapestry | February 02, 2009 at 22:46
The point about the labour/capital argument is where is capital heading now?
Not into Britain.
No oil company has carried out any exploration in Britain for ten years. Oil makes money in short bursts after years of investment and only when the price is high. Brown has driven all oil investors away with his 'windfall' tax approach to the industry. Britain became a net energy importer years ahead of time.
Britain's own banks won't invest one penny in the UK (or Europe for that matter). All future growth will come from emerging markets. Regulation is one reason. You can move businesses faster in third world swamps these days despite rampant corruption, than you can in roped down London.
Any investor wanting to make money will bypass the regulatory black hole of the EU. Free markets no longer exist in 'our' location.
Britain need never have been a part of the mess. But good old Ken Clarke and his Brownite and Blairite friends in the Labour Party have ensured that Britain has been totally shafted.
And the idiot still continues to blabber on about how wonderful the EU is for trade and investment and so on. Clarke does not even qualify as a useful idiot. He's an outright idiot who has destroyed a country for a generation.
Anyone with any capital to invest need only see Clarke returning to prominence in the Conservative Party and be convinced there is absolutely no point in investing in Britain.
That's why wages and jobs are collapsing. Capital has had enough, so labour pays the price of being pushed out of work.
Posted by: Tapestry | February 02, 2009 at 23:23
Those pontificating about comparative advantage should be aware that John Stuart Mill pointed out the flaw in Ricardo's argument 150 years ago. That is ,that while trade has benefits and comparative advantage is correct, the benefits are divided according to supply and demand and Mill shows how these can be manipulated.
Also Ricardo said something along the lines that he would be very sorry to see the theory used to take capital and jobs out of Britain-this closely followed his analysis of trade between England and Portugal which pointed out comparative advantage.
It seeems a Jewish stockboker of 200 years ago had a lot more feeling for his fellow citizens thatn the ragbag of Clarke,Mandelson etc.
Posted by: Anthony Scholefield | February 02, 2009 at 23:53
Well perhaps not the thread to comment.
Having watched Newsnight, Farrage and Vaz (whence Mandelson), this whole issue has now got to be seen as mishandled and misinformed,
I just cannot believe that this stage , no Govt Officil can state the clear case, and where are the Tories and the Lib Dems>>>
There must be a lot more to this than all 3 parties are willing to let out. WHY????
Is is facts of breach, or the issues are unclear? If the first, the longer they are hidden (and they will come out) the more you play to elements you consider undemocratic. If unclear, why are we paying you so much? 5 days in. Both Govt and opposition.
Why are you unable to to state that parties have given statements you can trust and understand?
Posted by: snegchui | February 03, 2009 at 00:37
His support of the single market is only measured by whether it works. Whether it works is only measured by whether the British people work. All this ideology crap is a complete waste of time unless it supports the prospect of "more jobs for British workers". If it doesn't do that, then it has failed.
Posted by: rugfish | February 03, 2009 at 04:11
Ken Clarke is right to condemn the stupidity of tripartite regulation. Gordon Brown's invention the FSA is directly responsible for the failing of Equitable Life and Northern Rock.
For generations the regulation by the Bank of England and the Treasury joinly worked, on the whole, satisfactorily. Extra layers of control always cause dilution of authority, and failures.
Posted by: Martin Cox | February 03, 2009 at 09:43
Why arent those who are striking looking for employment? Some pretty bizarre comments from the spokespeople on the news yesterday, talking about heroic actions of the workers on strike. Heroism my left arsecheek.
Good stuff from Clarke, particularly back Clarkes comments that its the quality of regulation rather than the quantity of it that matters.
Posted by: James Maskell | February 03, 2009 at 10:18
Anthony Scholefield
"Note Clarkey did not say improvements in living standards but'changes in living standards'."
For the vast majority this has meant a real improvement in the number of luxury goods they have acquired. However I grant you that this has in some case's not been true. Whats more for many the increase in luxury goods has been at the expense of their family life and their future well being. We have become a hard drinking, low saving society who's pension's have been stolen by a live for today administration with little regard for the future.
Posted by: The Bishop Swine | February 03, 2009 at 12:15
For years U.K.I.P.have been saying that we dont have a government and an opposition any more, just three parties spouting the same dogma about the E.U. The events this week have seen these three parties closing ranks to defend a mess which they have created. U.K.I.P.. are right when they state that they are now the opposition.
Posted by: Ric | February 03, 2009 at 15:51