The truth about conservatives and laissez-faire

Publius

Mr Nelson. Your point about rules is a good one. Rules are unthinking. A good leader is a kind of thinking rule.

Over-reliance on institutions is the modern fallacy, and this has a lot to do with the replacement of politics by the ghastly "administrative state" so favoured by Brussels.

As for "capitalism" or the "free enterprise system", it is a means, not an end. And the end is the good life. Lose sight of that, and you end up as a slave to systems.

Thatcher had her faults; but she had an instinctive sense of what the good life meant because she was brought up with it. Those who lack that sense do not belong in politics.

TrevorsDen

Brown only brought the phrase into his lexicon because it gave another of his neat (well crushingly strained actually) but ultilately meaningless soundbites.

His entire tenure in office has been to surround us in red tape whilst at the same time trusting banks and finance institutions to their own devices.

Tom Pride

“There is living tapestry of men and women and people and the beauty of that tapestry and the quality of our lives will depend upon how much each of us is prepared to take responsibility for ourselves and each of us prepared to turn round and help by our own efforts those who are unfortunate.”

“It is our duty to look after ourselves and then also to help look after our neighbour. . . ”

The difference between the Lady and the sanctimonious, self righteous, New Labour state feudalists with their false sense of moral superiority is that she really meant it. How they lie and distort in their pursuit of personal ambition, power and wealth, paying lip-service to the poor, the uneducated, the unfortunate who they need to perpetuate for their own jobs and careers.

THX1138

Been reading up on a bit of economics Adam Smith assumed that sympathy was the core human value and that society should be organised so that humans need for sympathy and mutual support should be satisfied.

Smith's main argument for markets was that under conditions of perfect liberty this would lead to perfect equality. His phrase "the invisible hand" appears only one in the Wealth of Nations and as an argument against
Neoliberalism economics.

I'm off for a lie down

Liam Murray

Is there any significance in the fact that these quotes & examples are no later than 1975?

As you say this was largely about framing and rejecting the dog-eat-dog labels etc. I'm on the right myself but to be honest I suspect an analysis of actual policy & practice post 1979 would show something closer to laissez faire that those comments and predictions did....

Denis Cooper

Having the Bank of England set interest rates to keep domestic general inflation close to a stated target, ie in effect a target for controlling the decline in the internal value of sterling, was a system which actually worked quite well for about 15 years.

It didn't start in 1997 with Gordon Brown, but soon after the removal of sterling from the ERM on September 16th 1992. I believe that the idea came from New Zealand.

Prior to that event, there had always been some kind of target for the external value of sterling - against gold, against the dollar, against the Deutschmark - and that didn't work well either, in fact it was often worse.

Brown formalised the existing "group of wise men and women", reclused himself from their deliberations, tightened the target range for inflation, and arranged for the new structure to be enshrined in statute law; but the basic system had already been running for over four years, successfully.

Concerns that it would probably break down began to be voiced by a cautious minority when house price inflation started to soar away from general inflation, a defect in the model which was exacerbated by the change from RPI-X to the EU's CPI as the measure of inflation used for the target.

Indeed the former Deputy Governor of the Bank, Sir John Gieve, said as much in a speech in February, just before he stepped down:

http://www.bankofengland.co.uk/publications/speeches/2009/speech377.pdf

"Secondly, I share the view that setting a target for a measure of consumer price inflation which excludes the costs of home ownership has done us no favours. It is widely recognised as a flaw in the harmonised CPI across Europe but it is of particular significance in the UK given the critical role that home ownership plays here in household budgets and wealth. Something needs to be done to remedy that situation, and if progress can’t be achieved at a European level I think we ought to consider going it alone."

Simon Denis

But wouldn't it be good to get back to laissez-faire? The nineteenth century - that age of gold - saw enormous industrial, technical and yes, social progress. Attacks on unbridled capitalism always focus upon some scene of want or misery and fail to compare - either with the past which led up to it, or with the surrounding, more prosperous mass or with socialist and interventionist alternatives. The living standards of Russia's poor, for example, were worse under the communists than under the last Tsar. Wheat production never again scaled the heights of 1913 - and so on. We should trumpet the virtues of laissez-faire - surely the very name is attractively free and cultured and anti-authoritarian. I'd rather be bossed by a boss - whom I could leave flat for one of his competitors - than by a bureaucrat, who can bear down on me with all the forces of the state.

Sam Armstrong

George Osbourne is of course correct, but the Tories need to be much more vocal about this. For thirty years the left has constantly peddled the lie that Thatcher stood exactly for laissez-faire and greed. So much so that half the nation genuinely believes that the Tories are greedy capitalists. There is a huge amount of work to be done in convincing the country about the things for which they really, truly stand.

oldrightie

Well said, Tom Pride.

Wilhelm

Fraser

''A pity she did not understand them then.''

Enoch on Mrs Thatcher's adoption of monetarist economic policies.

Olaf Rye

A brilliant post--I am very tired of the smug and half-educated classes that support Labour describing Tory politics as laissez-faire economics. How they can say that a laissez-faire system has prevailed over the last decade confounds me--have any of them even seen the mass of regulation pertaining to financial institutions ?

Mitchell Young

For a decade and a half people like Fraser have pushed globalization, free trade, 'the market', and the belief that Britain (and to a lesser extent the USA) could live on engineering ever more complex ways to trade bits of paper. When the whole thing comes crashing down they are like the proverbial infant looking at the shards of the cookie jar. 'Wasn't me!' What tripe.

Pandora Witherspoon

The good life is what we all aspire to, and, provided certain things are controlled properly (not necessarily with draconian zeal) and respect is found in all for all, it ought to be achievable.

PM Broon's error was to take the banks from the strictures of the well-run nursery and give them licence to manage their own affairs completely. Until the issuing of this license by Broon, and since the last time the banks misbehaved to a damaging degree they were controlled by the Old Lady of Threadneedle Street on how they conducted their business, who they loaned money to and what interest rates should be paid, etc etc. It is clear that bank boards have never therefore been entirely responsible for the management of the banks and the mindset was always to see how to get round regulation.

When Pandora Broon opened the box, he did so at his own peril, and ours. Banks went mad, making up their own rules etc with the effects that we have all now experienced.

Banks need now to be returned to the well-run nursery and be trained in how to run companies according to the Companies Act.

What also needs to happen is that the failed and bailed banks need to have the scrutiny of the Official Receiver so that judgement of how the businesses were run and how the directors conducted themselves can go through the normal scrutiny of failed companies.

Marcus Cotswell

An admirably full and well-researched response to my query - thank you!

Fraser Nelson

Marcus, thanks for asking - I had fun with that.

Liam Murray, The Lady was speaking about this right up until 1994 - but the 1970s was when the intellectual battle was joined so most of the quotes are from that era.

niconoclast

Who needs Labour to put the boot in to Laissez Faire when Tory grandees can do the job perfectly well themselves with such phrases as 'brutal unbridled,unnacceptable face of capitalism'? When was the last time we haeard Labourites referring to 'brutal.unbridled Socialism'?

Michael Foote

Adam Smith most certainly did not support a system leading to "perfect equality." Rousseau himself-- the prophet against inequality-- did not support such a notion.

Even taking the theory of moral sentiments into account, Smith still described the "core human value" as the tendency to "truck, barter, and exchange." Read up on Adam Smith a little more.

Robert Beyer, USA

As Chesterton wrote, "a battle, like all human works, is at once designed in its beginning and doubtful in its end." All the more reason to keep fighting.

donald fraser

I could produce a list of a hundred areas in desperate need of government regulation. However markets need regulated by regulators who are ahead of the game in each instance. Otherwise it is like buying shares at their peak value. As the saying goes "if you can see the bandwagon coming, it is too late to join". A good majority of my list relate to new technologies (e-commerce postal services, anti-virus software, computer security packages, web design services etc) that effect everyday people and small businesses on a daily basis in 2010.

With every salient proposal for regulation, there are a hundred arguments why not. Obviously the most powerful are delivered by lobbyists coming from profitable companies who would lose out on their carefully groomed market niches. The more loudly they scream, the bigger the pie they face losing. If you think I'm being dramatic, imagine outlawing the sale of anti-virus software in the UK? Ouch! Billions of revenue lost. Would it cost more than a few million for the UK government to replace their output themselves? Of course not! Am I confusing regulation with nationalisation? No, it is a start to regulating the much wider sphere of concern.

The tone was set when Labour first took power and the argument was heard that "adopting the Euro" would stimulate the economy from the additional work required converting everything over. The logic was perverse and it remains perverse.

Wealth is not added to or created by the act of change itself. This is the fundamental problem with the "a nice party" that Labour was under Tony Blair. Given the choice between two options it opted for ones that diminished wealth. That is because the popular clamour naturally prefers the most palatable changes possible. "Labour Spin" has been about promoting themselves as a "party of change" and that change is a good thing in itself. The last bit is the worrying part! This is the idea that change is an act to be enjoyed, even celebrated by all and sundry. There is only empty air when the thorny question of what economic fruits will be enjoyed after the change itself has been endured. "Labour Spin" translated an "apple a day" to a "banana a day". The soft, sweet flesh of the banana is not going to keep the doctor away with same type of efficacy.

Blossoming wind turbines are an excellent example of this "public art" or spin. It does not create wealth but like the argument for adopting the Euro it temporarily stimulates the economy from the additional work. I have grown to love wind turbines, purely on the basis of them being marvellous public art projects. Art does not have to have a purpose. As recession bites, the same cannot be said of government.

This is why a list is pointless, because government policy (both Conservative and Labour) is debated by those far removed from the belly of society. The days when the leadership core of Labour were shop stewards, who had worked their way up, have passed. It is a good job they are in government because they would be a fairly useless opposition.

David Bouvier

donald - are you seriously suggesting that the commanding heights of economy are now items like anti-virus software and it would be a good thing for what? the government to declare it a state monopoly and make it compulsory to install HMs version (which will not work well, be updated slowly, introduce it owns flaws, and be full of back doors for M15, HMRC or your local council to read your email and check your taxes).

If that is really what you have in mind, sir, then you are - for give me for saying so - a fool

donald fraser

Thanks for your reply David. It highlights why we face an enormous and prolonged economic depression. In the new technology sectors it is regarded as sensible to oppose the role of government to police us. Yet with little more than token protests the government has gained the right to police smoking in pubs and restaurants. It led to an observable collapse in the pub trade. Would I be to correct is saying that you would oppose policing of most new technology sectors regardless of the potential economic gains because of the privacy dangers?

Given the choice between more/less policing and policing of alpha/beta, I suggest public opinion currently opts for the wrong combination of choices on a regular and consistent basis. I use “wrong” to indicate choices that will largely prolong and deepen the economic collapse. Only if depression is bad and our comfort zones destroyed, will the right decisions be made in the new technology sectors and “economy-killing” decisions in older sectors (such as banning smoking in pubs) re-considered. Things need to be so bad that the public will “risk” supporting legislation that might lead to any hope of recovery (such as introducing “licensed smoking premises”) rather than as now where the luxury of denial “by the moral” exists.

Currently “risk” is calculated as the probability of the free market responding constructively to legislation essentially implemented for non-economic reasons. The ban on smoking was primarily for health or moral reasons, not economic. The risk was the market would not respond constructively by filling up pubs with new types of customers. I don’t think it is much to do with commanding heights, unless the term is to be distorted beyond the original intent. Health industry management successfully seized control over all pubs, clubs and restaurants in the UK. Is what you mean by commanding heights? I would say the term cannot be usefully deployed today without first considering the wider context of the Keynesian argument, including import controls and protectionism. However I can contemplate commanding heights being used in Web 2.0, but regulating cyber-attacks (which anti-virus solutions are part of) is in my mind linked to foreign policy objectives.