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Blog by Peter Cuthbertson.

"Suppose that a government can have any two of the following things, but not all three: globalisation, in the sense of openness to international flows of goods, services, capital and labour; social stability; and a small state. Or, to put it differently, conservatives can pick any two from an open economy, a stable society and political power – but not all three."

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So Niall Ferguson theorised this week both in the Daily Telegraph – and in his Centre for Policy Studies Ruttenberg Memorial Lecture. This trilemma, as he called the choice between three options, is now being faced by the right in Britain, the United States, Canada and Australia.

Global capitalism may well be the greatest process for creating wealth and annihilating of poverty, but in two ways it also tends towards instability. First, in the sense that an average person can expect to face an economic crisis about once in their lifetime. Second, the less dramatic reality that outsourcing, competition and rapid economic change can mean an insecurity and volatility of employment and incomes. So even forgetting the risk of a major crisis, the secure job for life is scarcely available in this modern economy, even if other jobs and sources of income may be. Social stability can nonetheless be ensured if the government makes major efforts to ameliorate this volatility – but there goes the small state. So in an economic crisis most of all, conservatives may find themselves in the politically unwelcome position of both defending globalisation and fighting back against new government initiatives introduced to combat the crisis. Or they can bow to an agenda of growing government, but concede the political victory to a left presented with an opportunity 'too good to miss'. Either way, the trilemma ensures that "[o]nly the Left can offer what seems to be a credible response: globalisation plus social stability plus a strong interventionist state".

Having identified the trilemma, Ferguson has also proposed some answers – answers that are orthodox without being unoriginal. Politically, conservatives must point out the degree to which the current crisis is anything but an unambiguous consequence of unregulated global capitalism. In policy, they must ensure the education system inculcates the broader set of skills appropriate for an economy in which most people will need to change jobs or careers at certain moments in their lives.

Interestingly, he also argued that conservatives should not be too keen on social stability, to the point of making social stasis their goal. Social change – especially in the form of social mobility – is often to be welcomed. It was here that Ferguson, perhaps unwittingly, touched most closely on the Sam's Club Republicanism that has been discussed on this blog in the past.  In Grand New Party, Reihan Salam and Ross Douthat proposed a "Sam's Club" conservatism geared self-consciously towards resolving the everyday concerns of the middle income American in the twenty-first century, such as stagnant income growth and economic insecurity. But whereas Ferguson's model appears to make globalisation the sole driving force, Salam and Douthat made much of the feedback between social and economic instability.

Grand New Party stresses that some social change – such as the decline of the two parent family – can exacerbate economic problems such as loss of employment or major declines in income. Similarly, the downward pressure mass immigration exerts on the wages paid for unskilled labour has profound economic and political consequences. So while Ferguson may appear to be suggesting that given the above trilemma, it is social stability that matters least, Sam's Club conservatism may put social issues as at the core of the dilemma – as much or more in the driving seat than globalisation. Social change in a more liberal and less family-oriented direction, far from being welcome, can worsen the effects of economic instability and undermine public support both for the free market and for the small state.

Such distinctions are important and have real consequences. But what both Ferguson and Salam/Douthat agree on is perhaps most striking: the uneasy, and underexplored tension between the free economy, social change and the small state. It is easy to imagine the tensions and questions that this trilemma raises being central to conservative debates across the English-speaking world in years to come – if they aren't already.

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