Over the weekend, Charles Moore's Telegraph column sparked off many responses. Charles pointed out that a classic critique of the Left is that, although free market capitalist liberal democracy might look like a system that provides opportunity for the poor to advance and forces to wealthy to deploy their riches intelligently and productively if they want to remain wealthy, in fact that is all a facade and the system is actually rigged. He went on to contend that in three key recent areas, this critique has, at least on the face of it, proved right after all: the wealthy manipulate democracy through the press; the wealthy use the banking sector to make high returns when times are good but then the rest of us pay to keep them rich when times are hard, sparing them the consequences of their folly; and the euro is preserved at almost any cost to workers, provided that bankers are not hurt. He noted that even if its critique has proved correct, the Left's "blind faith in the state makes its remedies worse than useless".
Tim disagrees with Charles. He wants to tell us of all the good things that capitalism has produced and of the failings of the Left. But Tim's argument misses Charles' point. Charles is not saying he's become a left-winger. He is saying that the Left's critique has proved right – not its solutions. He's saying that the system is rigged. When I was at Policy Exchange (and Charles was the Chairman), we wrote a more in-depth version of this argument here. Any right-winger must surely understand that the events of the past few years have been morally disastrous for our project. The wealthy took high returns out of the banking sector for a number of years, then when the reckoning came they used their political influence to tax the poor to keep the rich rich – and used the newspapers to tell the poor that this was done in their own interests. A more classic paradigm demonstration of how the Left's critique is correct could not be imagined.
Does that mean we should all now become left-wingers? Should we favour high taxes so as to "charge" the wealthy for those periods in which the poor will be taxed to keep them rich? Should we favour high inheritance taxes to limit the concentration of wealth to one generation, distributing power? Should we favour educational systems that actively discriminate against the wealthy and in favour of the poor, so as to make power hierarchies permeable? Should we try to create alternative power centres in society, such as Trade Unions, to try to offset the power of Capital?
I think not. But if we are not to do these things, that cannot be because we dismiss the Left's critique as ill-founded. It is extremely well-founded. Rather, we must believe that we can create systems and cultures that diminish the likelihood that, next time, matters will turn out as the Leftist cynic asserts. We must recognise what has happened, before we can address it (as Charles puts it, "the first step is to realise how much ground we have lost, and that there may not be much time left to make it up" – he fears we are complacent to assume that the Arab Spring couldn't happen here). We must change the culture, understanding that a system in which the wealthy and powerful use their political influence to confiscate wealth from the poor so as to maintain the vested wealth and power of the rich is immoral. We must understand, accept, and assert openly that the moral cost of such a system is higher than the moral cost of a little extra recession. We must introduce regulatory and structural reforms that reduce the temptation to bail out the rich next time.
We cannot simply deny this, comforting ourselves on the technical achievements of free market capitalism and the technical deficiencies of the Left's remedies. We must remember/resurrect two of the key ethical principles underpinning our economic order: that interest on debt (usury) is ethically defensible only because genuine risk is taken; and that the state does not exist to keep rich people rich.