Rise of the Red Tories (P. Blond)

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February 2009 Issue 155

Rise of the red Tories

Phillip Blond

The crisis is an opportunity to sweep away the rotten postwar settlement of British

politics. Labour is moribund. But David Cameron has a chance to develop a "red

Tory" communitarianism, socially conservative but sceptical of neoliberal

economics.

We live in a time of crisis. In such times humans retreat to safety, and build bulwarksagainst the future. The financial emergency is having this effect on Britains governing

class. Labour has withdrawn to the safety of the sheltering state, and the comforts of itsfirst income tax rise since the mid-1970s. Meanwhile, the Conservatives appear to be

proposing a repeat of Thatcherite austerity in the face of economic catastrophe. But thiscrisis is more than an ordinary recession. It represents a disintegration of the idea of themarket state and makes obsolete the political consensus of the last 30 years. A fresh

analysis of the ruling ideological orthodoxy is required. Certainly, this new thinkingisnt going to come from the left. New Labour is intellectually dead, while Gordon

Brown promises an indebted return to a now-defunct status quo. But, in truth, Brownsreconversion from post-socialist free marketeer to state interventionist is only plausible

because the Conservatives have failed to develop an alternative political economy thatexplains the crisis, and charts a different future free of the now bankrupt orthodoxies.Until this is achieved, Browns claim that the Conservatives are the do nothing party

has real traction, and makes the result of the next election far from assured.

On a deeper level, the present moment is a challenge to conservatism itself. TheConservatives are still viewed as the party of the free market, an idea that has collapsedinto monopoly finance, big business and deregulated global capitalism. Tory socialthinking has genuinely evolved, but the partys economic thinking is still poised

between repetition and renewal. As late as August 2008 David Cameron said: Imgoing to be as radical a social reformer as Margaret Thatcher was an economicreformer, and that radical social reform is what this country needs right now. He is

right about society, but against the backdrop of collapsing markets and without a macro-economic alternative, Thatcherite economics has been wrongfooted by events.

Thankfully, conservatism is a rich and varied tradition, and re-examinating its historycan provide the answers Cameron needs. These ideas are grounded in a conservatismwith deeper roots than 1979, and whose branches extend into the tradition ofcommunitarian civic conservatismor red Toryism. This is more radical than anythingemerging from todays left and should be the way forward for the right. The opportunity

to restore a radical, and progressive, Toryism must not be lost to the economicdownturn.
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To date, neither political party has offered a plausible analysis of the origins of themeltdown. Brown denies all responsibility while George Osborne and Cameron holdhim wholly and uniquely culpable. Given that no reasonable person can think either

position is tenable, both parties have surrendered the intellectual high ground. But thefinancial crash does provide an opportunity to think through a renewed one nation

conservatism. Cameron says that Disraeli is his favourite Tory. Disraeli attempted toameliorate a society destroyed by the rampant industrialisation of 19th-centurycapitalism, whereas Camerons chief target (until now, at least) has been a 20th-centurycreation: a disempowering, dysfunctional state. Nineteenth-century Tories criticisedliberal capitalism, while 20th-century conservatives condemned the illiberalconsequences of statism. But 21st-century Tories, especially against the backdrop of thecurrent crisis, must inveigh against both in favour of the very thing that suffers most atthe hands of the unrestrained market and the unlimited state: society itself. Andconservatism, so imagined, could reject the politics of classof our peopleand theinterests of the already wealthy in favour of a national politics that serves the needs ofall.

It was Edmund Burke who famously spoke of conservative radicalism being founded onthe little platoons of family and civic association. To love the little platoon we belong

to in society is the first principle of public affections. It is the first link in the series bywhich we proceed towards a love to our country and to mankind. This is the true spirit

of Cameroonian conservatism and, taken seriously, it represents a break with themonopoly logic of the market state. But to recognise this innovation for what it is wehave to contrast the potential of Camerons civic communitarian conservatism with

what it aims to transcend: the corrupt and rotten postwar settlement of British politics.

***

Since 1945 Britain has experienced two governing paradigms. The firststatesponsored Keynesianismextended from 1945 through the oil shocks of 1973 to itsdeath in 1979. The secondneoliberalismran from then until the global debt crisis of2007-08. It is often assumed that these models represent genuinely different andmutually exclusive worldviewsyet, in spite of very real distinctions, they shareimportant philosophical and economic assumptions, and both attracted cross-partysupport. Look at the society we have become: we are a bi-polar nation, a bureaucratic,centralised state that presides dysfunctionally over an increasingly fragmented,disempowered and isolated citizenry. The intermediary structures of a civilised life have

been eliminated, and with them the Burkean ideal of a civic, religious, political or socialmiddle, as the state and the market accrue power at the expense of ordinary people. Butif both 20th-century socialism and conservatism have converged on the market state,they have done so by obeying the insistent dictates of modernity itself. And modernityis nothing if not liberal.

To understand why the legacy of liberalism produces both state authoritarianism andatomised individualism, we must first note that philosophical liberalism was born out ofan 18th-century critique of absolute monarchies. It sought to protect the rights of theindividual from arbitrary abuse by the king. But so extreme did the defence ofindividual liberty become that each man was obliged to refuse the dictates of any

otherfor that would be simply to replace rule by one mans will (the king) with ruleby another. As such, the most extreme form of liberal autonomy requires the repudiation


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of societyfor human community influences and shapes the individual before anysovereign capacity to choose has taken shape. The liberal idea of man is then, first ofall, an idea of nothing: not family, not ethnicity, not society or nation. But real peopleare formed by the society of others. For liberals, autonomy must precede everythingelse, but such a self is a fiction. A society so constituted would be one that required a

powerful central authority to manage the perpetual conflict between self-interestedindividuals. So the unanticipated bequest of an unlimited liberalism is that most illiberalof entities: the controlling state. Even the most communitarian liberalsfrom

philosophers like Michael Sandel to politicians like Ed Milibandcannot promotecommunity without big government. They see the state as the answer, when it usuallymakes the problem worse. The legacy of liberal individualism is the restoration of thevery absolutism that it originally sought to overthrowa philosophical tragedy that can

be summed up as: the king is dead, long live the king.

Conservatives who believe in value, culture and truth should therefore think twicebefore calling themselves liberal. Liberalism can only be a virtue when linked to a

politics of the common good, a problem which the best liberalsMill, Adam Smith andGladstonerecognised but could never resolve. A vision of the good life cannot comefrom liberal principles. Unlimited liberalism produces atomised relativism and stateabsolutism. Insofar as both the Tories and Labour have been contaminated byliberalism, the true left-right legacy of the postwar period is, unsurprisingly, acentralised authoritarian state and a fragmented and disassociative society.

In respect of liberalism, the left has twice sinned. It has produced a managerial state thathas destroyed the old mutualism of the working class. And it has destroyed both middleand working class morality; in the name of permissiveness, it commodified sex and the

body, creating the licentious empty pleasure-seeking drones of the late 1960s. This left-libertarianism repudiated all ties of kith and kin and, though it was utopian in aspiration,its true legacy has been the dystopia of divided families, unparented children and thelazy moral relativism of the liberal professional elite. In this sense, the left was rightwing years before the right, and it created the conditions for universal self-interest underThatcher. The current political consensus is left-liberal in culture and right-liberal ineconomics. And this is precisely the wrong place to be.

***

In addition to this liberal legacy in Britain, two further pejorative factors persist: class

and monopoly. After the second world war, the need for massive reconstruction enabledEuropean countries to pool the interests of state, capital and waged workers. But inBritain few parties saw the need to abandon their sectional interests. The unions wereunwilling to discard free collective bargaining and British postwar industrial relationswere frozen in a state of unresolved class conflict. When Keynesianism began to breakdown, the workers responded simply by asking for more and more of less and less.Thatchers anti-union legislation did eventually curtail union power. But Britishmanagement was shortsighted tooas Tony Benn once put it, if they made a profit theythought there was no need to invest, and if they didnt there was no money available toinvest anyway.

Thatcher, in turn, declared this bankrupt British variant of corporatism dead. But sheovershot in the other direction. Instead of holding the middle ground, the state was


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deployed in favour of the owner and entrepreneur. The benefits of Conservativeliberalisation in the late 1980s accrued mainly to the top. The middle class saw its risein income partly offset by more debt, while the poor sank relatively lower. New Labourdid little to reverse these trends. In short, Britain remains stuck with a contested, class-

based capitalism that has done great damage to British life.

The final feature of postwar British politics is the maintenance and escalation ofmonopoly. The fact that the state has established monopolies is self-evident.

Nationalisation was a failure on its own terms, even more so because working peoplewere never enfranchised by it. It created remote new behemoths, with populardisengagement from the levers of power. JB Priestley, socialist doyen of the intellectualclass, wrote in 1949 that the area of our lives under our own control is shrinking

rapidly politicians and senior civil servants are beginning to decide how the rest of us

shall live.

Thatcherite neoliberalism was determined to terminate all these state monopolies.

Instead, markets would become the vehicle by which efficiency was maximised andprosperity attained. But the free market fundamentalists often did little more than createnew monopolies of capital to replace those of the state. It was not until New Labourenacted the 1998 Competition Act that Britain obtained its first effective anti-monopoly,

pro-competition regime. And, gallingly for Conservatives, the most effective protectionthe British economy gained against restrictive practices during the Thatcher and Majoryears came from Brussels competition legislation.

The financial crisis is just the latest example of the collapse of markets into what I callmodal monopoly. By this I mean a model of monopoly that extends beyond whetheran individual company has undue market influence to whether a certain mode or way ofdoing business constitutes a cartel. For example, the great housing crash is primarily theresult of the absorption of all local, regional and national systems of credit into oneform of global credit. The worlds financial system lacked the firewalls needed to

separate local from national and international capital. Unduly reliant on one source ofcredit supply, the residential asset market collapsed when this supply was compromised.The housing bubble was just the last and most notable piece of neoliberal speculation to

burst. In the meantime, the big banks were dedicated to generating price fluctuationsand asset bubbles and then exiting before their demise. This strategy of marketmanipulation deployed enormous amounts of capital in speculative arbitrage (just fiveUS banks had control of over $4 trillion of assets in 2007). This market was far from the

thousands of small investors envisaged by classical free-market liberals.

Whether by private or public means, the mark of recent decades has been defined bythis three-part story: the liberal consensus, the persistence of class, and the triumph ofmonopoly and speculation in the name of free trade and modernisation. Against this,Camerons nascent civic conservatism would be the first radical break with all of the

aforementioned ills. It is the fulcrum around which the renewal of Britain could turn.But he has his work cut out. The erosion of our society extends way beyond thedysfunction of the underclass. A study last year by Danny Dorling showed how normalanomie has become, concluding that even the weakest communities in 1971 were

stronger than any community now. This is, indeed, a broken society.


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British conservatism must not, however, repeat the American error of preaching morals

plus the market while ignoring the fact that economic liberalism has often been a cover

for monopoly capitalism and is therefore just as socially damaging as left-wing statism.Equally, if Conservatives are to take power from the market state and give it to the

people, they must develop a full-blooded new localism which works to empower

communities and builds new, vibrant local economies that can uphold the partys civicvision.

***

How will this happen? What must Camerons priorities be, and how can he begin to

build a new communitarian Tory settlement? He could start with four tasks: relocalisingour banking system, developing local capital, helping normal people gain new assetsand breaking up big business monopolies. The first priority must be a banking systemthat works. Britains banks no longer provide credit because they are crippled by

150bn of constantly devaluing mortgage securities. To fix this, we need a new, parallel

banking system. To get one, Cameron should announce a reconfiguration of the PostOffice to extend its currently limited retail banking function, and reverse PeterMandelsons privatisation plan. The Post Office is universally popular, national, tied tothe local community and, crucially, entirely free of bad debt secured on declining assets.Other banks would lend to it but, more importantly with interest rates approaching zero,the Bank of England could use at minimal cost quantitative easing (printing money)to underwrite both business and mortgage credit. Using the Post Office would introducesome public sector competition. Yes, the states balance sheet would expand, but at

nominal cost. If it helps to arrest the fall in asset prices (as a restoration of lendingwould) any public money spent would secure money already invested in Browns

bailout, and be far more effective than any fiscal stimulus. This new Post Office couldgenuinely restimulate the economy by lending at small margins, and by being involvedin local investment rather than global speculation. It could even be localised rather than

privatised, giving it back to communities, to extend investment and increase prosperityin every neighbourhood.

Having announced this plan, Cameron should move forward by helping localcommunities to take ownership of their assets too. He should set up a new class of localinvestment trusts, dedicated to investing in the cities and villages that they serve. Thesetrusts could become new centres of local finance; rather than investing in Iceland, localcouncils and other bodies should be compelled to deposit public funds with them,

increasing the local capital base. Likewise the Torys proposed new social fund couldact within the trusts in deprived areas to offer micro-finance to people without assets.This would create a new, but distinctly conservative form of asset based welfare leadingeventually to claimant independence. The trusts would own the local Post Officenetwork, and each trust could work to invest and develop local economies. Instead ofthe wasteful regional development agencies (RDAs), which spend over a third of their10-12bn budget on administration and help less than 1 per cent of all small businesses,this could create a genuinely local form of venture capital. The regional trust network,meanwhile, could facilitate new guilds and cooperatives. With a common financecentre, and the use of modern technology, these could do anything from research anddevelopment to export drives to running local schools and hospitals. It would put real

energy behind the conservative co-operative movement that David Cameron launchedin 2007.


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The next step would be to ensure local government procurement is devolved to localbodies. A 2005 study by the New Economics Foundation showed that every poundspent with a local supplier generated 1.76 locally, while every pound spent withoutside suppliers generated only 36p. A 10 per cent increase in the amount of councilmoney spent locally would mean an injection of 5.6bn into local economies. And if the

trusts were also able to issue bonds, this could restore something like the power of the19th century municipalities. (Residents could even participate in mass versions ofDragons Den to decide on the investments to be made.) So conceived, the localities

could help to reverse the dreadful centralising pull of Londonwhich sucks all thetalent and money from the rest of the country into the overheated south east, leavingeverywhere else a mere backwater.

The next step for conservatism is to reverse the old politics of class, by restoring capitalto labour. Cameron should reject the Marxist narrative that paints Tories as wedded to adisenfranchised proletariat. On the contrary: conservatives believe in the extension ofwealth and prosperity to all. Yet the great disaster of the last 30 years is the destruction

of the capital, assets and savings of the poor: in Britain, the share of wealth (excludingproperty) enjoyed by the bottom 50 per cent of the population fell from 12 per cent in1976 to just 1 per cent in 2003. A radical communitarian civic conservatism must becommitted to reversing this trend. This requires a considered rejection of socialmobility, meritocracy and the statist and neoliberal language of opportunity, educationand choice. Why? Because this language says that unless you are in the golden circle ofthe top 10 to 15 per cent of top-rate taxpayers you are essentially insecure, unsuccessfuland without merit or value. The Tories should leave this bankrupt ideology to NewLabour and embrace instead an organic communitarianism that graces every level ofsociety with merit, security, wealth and worth.

***

Such ideas are not without a past. The idea of a Tory distributist state is not new; indeedthe phrase property owning democracy was first coined in 1923 by the Conservative

MP Noel Skelton. Anthony Eden used it too in his celebrated speech to the 1946 partyconference, and the philosophy enthused both Churchill and Thatcher. Recent Tory

proposals to exempt the savings of the low paid and pensioners from tax are exactly thepath to follow. They should go further, arguing for far-reaching extensions to employeeshare ownership, workers buyouts and the promotion of equity guilds and asset co-operatives. This would bypass the trade unions as institutions permanently wedded to

welfare serfdom, and wed ownership to the earning of wages.

The final piece of the puzzle is for Conservatives to break with big business. We mustend a model in which competition is reduced to a cartel of vast corporations maximising

profits by discouraging competitors and minimising wages by joining with the liberalleft to encourage mass immigration. A covert alliance between the liberal left and liberalright has destroyed incomes and identity at the bottom of the scale.

The Tories must take on the unrecognised private sector monopolies that hide on everyBritish high street. According to figures from IGD research in May 2008, the Britishgrocery market was worth 134.8bn. Of this, the big four supermarkets took 98.6bn, a

73 per cent market share. In the name of competition we have happily handed over ourhigh streets to Tesco, strangling local commerce. The more that price is our only


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measure of competition, the bigger the economies of scale required to compete, and thehigher the barriers to entry for small local competitors. Our fishmongers, butchers, and

bakers are driven outconverting a whole class of owner occupiers into low wageearners, employed by supermarkets. And, once you have a monopoly, it demands thatother monopolies serve it, just as Tesco demands economies of scale from its suppliers,

driving out small and medium-size farms. It is perfectly clear that the Office of FairTrading and the Competition Commission are not up to the job. Cameron shouldrevamp them and announce his intention to break up all the big-box retailers. And,when he is finished, he should take a hard look at mobile phone companies. Breaking upsupermarkets wont change the world: but, as they say, every little helps.

Taken together, such policies will help conservatives create a transformative red Torymanifesto. They would build a new economic and capital base that decentralises powerand extends wealth and also makes a final break with the logic of monopoly and debt-financed capitalism. In doing so, Cameron can finally bring together the Tory traditionof Disraelis reform of capitalism with his own entirely justified desire to be a social

radical. It would render the left superfluous and redefine Marx as just anotherdispossessor of the poor. Moreover it would recover the insights of 19th-centuryconservatives like Cobbett, Ruskin and Carlyle, ally them with Tawney and thedistributism of Chesterton, Belloc and Skeltonall of who knew that, withoutsomething to trade, one cannot enter a market. Making markets truly free preventscorporate domination, but also extends ownership, prosperity and innovation across thewhole of society. The task of recapitalising the poor is, therefore, the task of making themarket work for the many, not the few. David Cameron doesnt need to do any of this to

win the next election. But, to be a great prime minister, he does.
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Rise of the Red Tories (P. Blond)

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