Another Voice | 14 February 2009

Like skaters on a lake’s frozen surface, we are sometimes reminded how thin is the crust of philosophical confidence on which our systems of political economy rest. Two years ago we were mostly agreed that free market economics had won the ancient argument between capitalism and the planned economy. Two years ago the case for a single market for goods and labour within the European Union was widely thought unanswerable.

Yet everywhere we turn today, wise heads mutter that the global free market has failed. And (after some placard-waving at the Total refinery and beyond) we heard Alan Johnson, the Health Secretary, declare on the Andrew Marr programme on BBC television last week that labour from outside Britain might ‘undercut’ domestic workers — as if this ‘undercutting’ were a bad thing, rather than the very engine of a capitalist economy.

Mr Johnson was not challenged. No senior colleague came to the public support of Lord Mandelson, the Business Secretary, in his restatement of the obvious about the single market. Is our grasp of general principle so weak? Do politicians not understand that if we say workers should not travel to ‘undercut’ local labour markets, the corollary that cheaper goods should not travel to ‘undercut’ locally produced goods cannot be far behind? How can our confidence in Adam Smith have evaporated so fast?

It is true that part of the reason for our former philosophical certitude lay in results. Why doubt prevailing theories when we were demonstrably getting richer? By their fruits we should (we thought) know them; and even an ignoramus may, if medical science cures him, claim to ‘believe’ in its theoretical base.

But did our confidence go no deeper? Medical science may be hard to fathom, but political economy is not.