31 May 2018

Popular capitalism is about so much more than Maggie


Accusations of an obsession with Margaret Thatcher are a fact of life on the pro-market Right. What makes such charges so frustrating is that it’s usually your accuser that has the unhealthy fixation on the Iron Lady.

The latest illustration of this phenomenon is an article in which George Eaton, the New Statesman’s political editor, cites the last Prime Minister but four as the explanation of the Conservative Party’s current predicament.

He argues that the Conservatives are “enduring and intellectual and political crisis” not just because the electorate has “lost faith” in the “popular capitalism” at the heart of Thatcher’s electoral offering, but because that idea is “no longer possible”.

Given that CapX was founded to make the case for popular capitalism, I can’t let that assertion go unanswered.

Eaton offers a narrow definition of popular capitalism as the theory that “voters would be given a permanent stake in the market through the sale of council housing and shares in privatised utilities.” This idiosyncratic characterisation makes it a necessarily one-time thing: eventually you run out of stuff to sell off. (That is not a new criticism. And, for what it’s worth, it was a Conservative who made the point with the most aplomb.)

Thankfully, however, there’s more to the idea than that. According to less eccentric definitions, popular capitalism is a belief in spreading ownership – usually of firms and property, but not just ones that were state-owned – across a wider portion of the population. In other words, it doesn’t just rely on privatisation and flogging council flats.

Whatever the merits of boosting ownership, it’s both perfectly possible and, in many respects, popular. In a divided political debate, a belief in increasing the rate of home ownership is a rare point of agreement between the major parties. Wider private ownership is also entirely within the powers of the government to help deliver.

This, of course, is only part of the economic debate going on in Britain. More generally, capitalism’s advocates have their work cut out. Eaton cites polling that suggests 49 per cent believe that “socialist ideas are of great value”. Renationalisation of utilities is popular. Polling for CapX has found a decided lack of enthusiasm for free enterprise.

But none of this has much to do with Thatcher.

At CapX we prefer an expansive definition of popular capitalism that emphasises the market’s unstoppable power as a force for liberating, enriching and empowering change. When it comes to British politics, that means identifying the many problems for which the market isn’t just not the cause, but might just be the solution. It means trusting people to decide how to lead their lives. What it does not mean is reheating 30-year-old policies.

One problem crying out for a solution is the housing crisis, the cause of which is an artificial constraint on supply at the hands of the state. Put crudely, more market, not less, would go a long way to fixing this particular problem.

More generally, it isn’t the freest markets that leave consumers dissatisfied. Quite the opposite. The provision of utilities, which voters are so unhappy with, still brings with it considerable state involvement. The collapse of Carillion, which is frequently cited as proof of a failure of “neoliberalism”, has, as Kristian Niemietz explained on CapX at the time, very little to do with the big questions about how to organise an economy.

The other side of the fight for popular capitalism is pointing out the dangers of the alternative. It may be an increasingly unpopular view, but it remains true that nationalisation entails inefficient and immoral expropriation. (Anyone who thinks the use of that word is melodramatic should remember that Labour’s plan is for Parliament to set the price of the privately-owned firms it has its eyes on.) The state’s accumulation of more and more economic power isn’t just a threat to prosperity. Though it is that. It’s also a threat to democracy.

British politics is in the middle of a fierce and important ideological battle. But this clash of ideas will be won on the ground. Making the case for the market is not to be trapped by ideology. Quite the opposite. It is to learn from experience.

The lesson from the Eighties – if we must focus on the Thatcher years – is that policies written off as radical are popular with voters if they deliver.

But it isn’t just one decade in British history that demonstrates that popular capitalism works. The market has improved peoples’ lives across different continents and eras. And it can do so again in Britain today.

Oliver Wiseman is Editor of CapX.