Nick Faith is a Director at Westminster Policy Institute.
Over the past two weeks, both the Chancellor and the Business Secretary have given speeches making the case for capitalism. So what, you may ask? It is hardly surprising that two Conservative Ministers have been waxing lyrical about a free market, pro-business approach to wealth creation.
However, while George Osborne and Sajid Javid made it clear that they were fervent supporters of capitalism and business, they also signaled a shift in the way the Conservative hierarchy view the role of business and society. They both effectively argued that free market capitalism, left to its own devices, is its own worst enemy, and that without some state intervention it could as a system be rejected by large parts of the British public.
According to the Chancellor: “We’ve accepted that there’s a bigger role for government in trying to rebalance our economy.” The Business Secretary said: “In 2015, capitalism is for many a dirty word…capitalism is facing its gravest threat since the end of the Cold War…government has a crucial role to play in enhancing capitalism.”
The fact that two of the most economically liberal Conservatives are saying that outright libertarianism is not compatible with modern-day Britain is intriguing. And it is not just Osborne and Javid who are openly discussing the role of business in society. Launching The Good Right earlier this year, Michael Gove said: “Left to their own devices, capitalists seek out monopoly positions, form cartels and become rent-seekers. So we need Government to intervene.”
Business is starting to catch on, too. While ‘traditional’ corporate social responsibility activities were big in the nineties and the noughties, consumers and politicians now assume that all companies are operating in an environmentally considerate way, and are supporting charitable activities in their local communities. Nowadays, thoughtful CEOs are replicating the successful approach of the philanthropic capitalists such as Rowntree and Cadbury. They are contributing ideas to some of the big challenges facing Britain’s continued economic and social success – from paying their employees a decent wage to helping reoffenders to get back into work and into safe and good quality housing.
Lest we forget, the language and indeed the theme of ‘responsible capitalism’ was a feature of Ed Miliband’s time as Leader of the Opposition. During the last parliament, Miliband and his closest adviser, Stewart Wood, tried to formulate an intellectual argument that the neo-liberal capitalist system was defunct. In his much-derided 2011 conference speech, the Labour leader talked about “asset stripping predator” businesses, comparing them to “producers”. While he was unable to actually define his philosophy, and while his solutions were, quite frankly, economically illiterate (the energy price freeze being the most obvious example), Miliband’s fundamental argument that all is not well with capitalism has touched a nerve with leading Conservative thinkers and commentators.
Tim Montgomerie’s project for the Legatum Institute shows exactly why the Tory leadership are weighing into this debate. According to YouGov polling for Tim’s report, large majorities of people in the UK (and other developed countries) believe that the rich get richer and the poor get poorer in capitalist economies. They view big business as tax dodgers and polluters who are purely out to make a profit at the expense of the ‘working man and woman’.
A crop of MPs, including the talented Rishi Sunak and a super-charged team of thinkers among whom are Neil O’Brien at the Treasury and Nick King at BIS, are working out what the centre-right approach to revitalising capitalism should look like. Government departments have been tasked with implementing polices that are “pro-consumer, not pro-producer”. We can see evidence of this with the National Living Wage, the introduction of the apprenticeship levy and a focus on more competition and switching in banking and energy. Companies that are contracting with government are being told they need to be more transparent.
I have just finished reading a wonderful book by Tim Ross looking at how the Conservatives won the last election. It is clear that alongside a disciplined and targeted campaign, events (notably the rise of the SNP after the Scottish referendum) conspired to hand Cameron the keys to Number Ten. The Tories didn’t necessarily ‘win’ over the hearts and minds of the British public.
In 2020, regardless of who is leader of the party, it is clear that it will need to do a lot more to demonstrate they are on the side of the “have nots” as well as the “haves”. A starting point is understanding that a large section of British voters do not trust business or the capitalist system that has been so successful at alleviating poverty both in the UK and across the world. By acknowledging its faults and presenting new solutions to the electorate, the Conservatives will be better placed to revitalise capitalism.