26 April 2018

The Tories should ditch corporatism and champion the self-employed


“The ideal of a free market society”, as feminist political philosopher Elizabeth Anderson explains in her book Private Government, “used to be a cause of the left”. Indeed, before Marx revolutionised left-wing thought and mechanised power revolutionised our economy, men of the Left – and it was generally men – looked to free exchange as the great slayer of arbitrary, authoritarian domination.

From Lilburne and the Levellers, through to Locke, Paine and yes, Adam Smith too, the market was seen as an essential component on a pathway towards equality. Rather than celebrate inequality, as is sometimes the case on the libertarian right today, the market was supposed to eradicate it.

The real target of Anderson’s ire is the intellectual mutation of libertarianism in America from a philosophy that champions individual liberty into a movement that merely defends the vested interest of non-state collectivism. Firms, as Smith and his contemporaries would surely have understood, can be just as domineering and disempowering as states. Why then, Anderson wonders, do libertarians so rarely rail against the undemocratic nature of these “private governments”?

It is a legitimate philosophical question. But it also has real-world implications for political strategy here in the UK. Because the well from which Adam Smith’s free market radicalism springs is something that has not only survived the social transformations of the past three centuries, but is once again a rising force within British economy.

That ingredient – the deliverer of free men from “servile dependency” – is self-employment, the recent, extraordinary rise of which is undoubtedly the biggest structural shift in the UK labour market this millennium. And with a shift like that also comes a change in the country’s political sociology. There are 4.77m “free radical” votes that, as this history of ideas shows, are not a given for the Right.

To put it bluntly, the Tories cannot afford to lose the votes of such an entrepreneurial voter group. But neither should they underestimate the scale of the policy challenge needed to deliver a “new deal” for Britain’s self-employed millions.

For one, the ethos of the relevant public policy systems – employment legislation, tax and benefits, education and training, even infrastructure investment – are all consistent with a time when self-employment was markedly less central to British society and its economy. Now that it approaches the size of the entire public sector, with digital platforms developing ever more innovative ways of deploying flexible labour, the breadth of policies required is staggering. This week Demos launched a report that outlined 30 new policies which could help boost economic security – in pensions most of all. But to be frank, even if they were all implemented it would only mark the beginning of a much longer journey.

The rise of the self-employed presents an intellectual challenge as much as a practical one. For in their own ways, both Labour and the Tories are afflicted by a “corporatist bias” that sees employment by firms as the norm. On the red side, this manifests itself in an unshakeable belief that self-employment is a story of enforced vulnerability, of wannabe employees cruelly nudged into self-employment. To put it bluntly, this is nonsense: countless pieces of research, including by Demos, finds self-employment to be both overwhelmingly chosen and popular.

True, there is some evidence of false self-employment and certainly there are legitimate legal questions about the status of workers in the digital platform economy. But as far as the overall self-employed labour market goes, this is the thinnest end of a very thick wedge.

Yet for the Tories the intellectual challenge could if anything be deeper, striking to precisely the point Anderson raises. After all, the interests of the self-employed and large firms are not always aligned and of late the Tories have preferred the latter. No clearer example of this is needed than Philip Hammond’s attempt to raise national insurance contributions on self-employed individuals directly. This despite the fact that the real beneficiaries of a national insurance gap between employees and the self-employed are not the self-employed, but rather the firms who employ them.

Moreover, the policies needed to deliver for the self-employed won’t always be to the Conservatives’ liking. From universal credit to maternity pay and pension provision, the benefits system in particular should be beefed up to serve the self-employed. This underlines an intellectual blind-spot of the modern free-market Right: the fact that state power can be a legitimate tool for delivering a free market society. Indeed, too often it seems like the modern Right is animated more by a purity of policy means, rather than the fight for society’s broader values.

The Tories should discard their corporatist clothes and champion the self-employed. Yes, this will require some ideological creativity but that is something Adam Smith would surely have admired. This, after all, was a man who saw the market as the tool of the Left.

Alan Lockey is head of the Modern Economy Programme at Demos.