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It’s strange to think that back in 1979, the year I was born, and, more importantly, the year Margaret Thatcher came to power, you would have been proud to call yourself a capitalist. Capitalism meant being in control of your own destiny, free from state interference. It signified boundless potential – through your own efforts – to raise your standard of living, and an opportunity to challenge the status quo.
But nearly forty years after the Thatcher experiment began in Britain and the Reagan revolution got underway in the US, capitalism is not only in trouble, many of its defenders are not displaying the sense of self-determination Thatcher championed. There’s too much blaming the Left for making seductive promises to voters – promises that they probably can’t honour. It’s all too easy to suggest that the problem with the new generation of young socialists is that they are misinformed; that the economic turmoil of the 1970s, and the reality of life behind the Iron Curtain, are now too distant in time.
Rather than blaming the Left for the return of socialism, it’s time for supporters of capitalism to engage in a bit of self-reflection: to take a leaf from Michael Jackson’s song book and look directly at the man in the mirror.
The hubris of capitalists will be capitalism’s downfall
Hubris kills and ever since the Berlin Wall fell – at the end of the decade in which Thatcher and Reagan reset global politics – capitalists have been dangerously hubristic. It has taken many forms. Notably the widespread sense just before the 2008 crash that boom and bust had been abolished. Only a year before the global economy began to tumble, The Economist magazine, the go-to publication of the rich and cosy Davos summiteers, reported with zeal that: “having grown at an annual rate of 3.2% per head since 2000, the world economy is over halfway towards notching up its best decade ever…Market capitalism, the engine that runs most of the world economy, seems to be doing its job well”. Not that well as it turned out.
However, the real problem for capitalism is not the hubris shown before 2008, but that shown since. Too many free market thinkers have continued seeing only the upsides of capitalism, blaming everything else on the state and the crash, in particular, on central banks and government subsidy of the housing market. Overlooking the greed of too many on Wall Street and in the City of London.
There’s too much defence of chief executive pay – even when it bears no relationship to company performance. There’s too little understanding among supposed friends of the system about the differences between free markets and big businesses. Adam Smith – who wrote powerfully about the underhand instincts of business – would be appalled at the way think tanks that purport to understand his teaching are so ready to defend large companies because they mistakenly see private commerce as nearly always good and attempts to limit corporates as nearly always bad.
This rosy view of business behaviour is most un-conservative, most un-Smithian and pretty socialistic. Accepting that capitalism has flaws is not a sign of weakness: it is what can make capitalists, unlike supporters of state-directed economies, look grounded in the real world rather than aspiring to reach an unattainable utopia via tractor production targets and other failed signposts of communist glory.
Realism is the first step to saving capitalism
First, there’s history. While markets have existed for centuries, technological and other forms of progress were, until recently, slow and sporadic. Prosperity requires something more than free enterprise. The effectiveness of markets depends on a series of factors that vary across time and across countries. That includes not only trust but also the extent to which society is free and open: where societies are tolerant of people who push boundaries and try new things, markets will be far more successful at delivering economic improvement. Culture matters as much as markets themselves.
Second, is creative destruction. We need to recognise that the very same forces that drive economic improvement within the capitalist economy also bring disruption. Unless people have the coping mechanisms needed to deal with this disruption, the forces that are pushing us forward will be resisted by the weight of those left behind. While this necessarily requires state intervention, it is intervention of a very particular kind: that empowers individuals, rather than interfering with our freedoms.
It points to an agenda of supporting individuals in ways that allow them to both keep up with change, such as through adult education, and to be creators of change, rather than mere responders to it. Had appropriate policies been in place to help those in deindustrialising England or rust belt America in the 1980s, as opposed to dumping whole communities on welfare, the huge protest votes of Brexit and Trump might never have happened. And with the robot revolution imminent – threatening even more disruption to the labour market – these issues are far from mere historical interest.
Third, is instability. Along the path of continued improvement, instability is inevitable. The Cambridge economist John Maynard Keynes was right to point out that boom and bust is an intrinsic part of capitalism. The ever unknowable future means there is little firm basis on which to “pin down” investment decisions, meaning investors have a tendency to copy each other, falling prey to fads that generate waves of optimism and pessimism that destabilise the economy.
Unfortunately, many capitalists refuse to accept that markets contributed to the events of 2008 and, imitating Milton Friedman’s analysis of the Great Depression, load all blame on to the state. We need to look to the underappreciated Austrian School of thought, one built around figures such as Hayek, who like Keynes but unlike Friedman, see instability as inevitable. But who also doubt whether the state is any more capable of judging the future than are private individuals, making the economy to some extent “untamable”.
Capitalists themselves need to reset the rules
While capitalism has been oversold, there is also an important sense in which it has been undersold. Too much terrain has been foolishly handed over to the Left when it comes to big modern-day issues that spark popular debate: equality and freedom. Ha-Joon Chang has famously argued that there is no such thing as a free market economy. That markets cannot properly function without the state establishing the “rules of the game”, and that, as such, the rules can be rewritten to deliver a more equitable outcome.
Alex Marshall similarly argues that modern markets are far from “natural”: that the markets that we find in rich economies are a result of law and order and state-funded infrastructure, and that the businesses that operate within these markets benefit from certain legally granted rights, such as limited liability. As I’ve argued elsewhere, this should be the rightful ground of Conservatives, not socialists. Rather than childishly rejecting anything that tampers with the idea of a perfectly competitive market – one that only exists in textbooks – Conservatives need to take ownership of sensible, albeit limited, forms of economic intervention.
It is notable how much 19th century Classical Liberals engaged with debates surrounding, for example, patent rights, bankruptcy law, limited liability and the role of Central Banks. They engaged not just with efficiency but with freedom and fairness. Rethinking the foundational elements of capitalism – the “rules of the game” – is precisely what’s needed today if we are to stem the tide of socialism by tackling “crony capitalism”.
People have lost faith in crony capitalism, not free enterprise
While people have lost faith in capitalism, it is striking that support still exists for free markets, entrepreneurship and small government. The Reason-Rupe Millennial Poll of 18 to 29-year-old Americans found that whilst college-aged Americans had a less favourable view of capitalism than socialism, 72% supported the free market system. And, in the YouGov global poll of seven countries, conducted for the Legatum Institute, more people agreed than disagreed with the statement that “free enterprise is better at lifting people out of poverty than government”.
If it’s not the free market entrepreneurial element of capitalism that people dislike, what is it? It’s the very thing that can make capitalism akin to communism: the state and business being in each other’s pockets. It’s the lack of independence between the state and big business: government and business sucking up to one another, creating a layer of power that seems impenetrable to anything other than established elites, or, as in 2008, the big banks.
The ability of business to fund politicians has created a back door for established firms to unfairly influence policy. Occupational licensing – what Morris M. Kleiner calls “the fastest growing labor market institutions in the United States since World War II” – has effectively granted incumbent firms and practitioners monopoly rights, increasing the wages of skilled workers by around 15%, exacerbating income inequality.
Then there is the fact that while the state has been cozying up more and more to big business and skilled workers, they have cut their ties with trade unions. That leaves the public wondering why one and not the other is deserving of the ear of power. And, rightly or wrongly, the rescue of the banks made the state look like it was an instrument of the banks, rather than representative of the democratic will of the people. In the words of Joseph Stiglitz, “it was going to the assistance of the victimizer, and leaving the victims to take care of themselves”. Of course, people accept that within a free market free enterprise system, they face risks of bankruptcy and job loss. What they don’t expect is that such risks will be alleviated for those at the top.
Rebuilding support for capitalism requires a Reformation for the 21st century
Five hundred years ago, the process began of cutting the ties between church and state. Now it’s time to cut the ties between the state and big business, though this time through less bloody means. As Stiglitz himself argues, “much of the inequality that we can see today is the result not of true market forces but of ‘ersatz capitalism’”. Capitalism needs to be redesigned for a new age, guided by what was once the priority of all Conservatives: not special interest groups, business or otherwise, but individual freedom. Doing so will show that it is not the market that is inimical to equality and freedom; it is socialism.
If capitalists want to save capitalism, they need to stop blaming socialists for overselling socialism. We need to look critically at the ways we both oversell and undersell what we would do best to call the free market, free enterprise system. Let’s get Michael Jackson playing.
Dr Victoria Bateman is Fellow in Economics at Gonville and Caius College, Cambridge. She writes regular economic commentary for Bloomberg View and CapX, and is known for her stance on Brexit and for using art to explore perceptions of the female body.
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SubscribeThe problem that I have with articles of this kind is that I have no idea how the author defines certain terms. What exactly is it to be far right, online right or alt-right? They seem to be terms that mean whatever you want them to mean to fit the occasion, though I note that they are often used merely as terms of abuse to be deployed against those who disagree with you on some issue or other, whether or not that issue has any real political dimension. We seem to be living at a time when political debate has been debased to the point where it consists of meaningless noise. As for Roger Scruton, the great man should be left in peace.
Couldn’t agree more.
I could not read her tripe after the first couple paragraphs. Left wing liberal butterfly trapped in her bubble and no idea of the real world outside… the bogeyman ‘Far Right’ of her imagination being conjured up. Another witch-finder General, witches may not exist in reality – but these guys will still find them and tell us all about the danger of them….
I have access to OpenAI, a site where you can access very impressive Artificial Intelligence software for experimentation and product development. One thing you can do with this is to write a story. The basic idea is that you provide some starting sentences, and then the software writes the following sentence(s). You then add the next sentence, and the software adds another sentence, ad infinitum. If you first start using it it is quite uncanny how these stories unfold. Very, very, impressive. Since it comes from a program that absorbed trillions of facts, I had the assumption that the underlying facts & logic were irreproachable. I was wrong, the stories tend to be surprisingly nonsensical. (It works amazingly for fiction though.)
This article closely resembles such a session.
As a test, I used the first sentence (bold) of the article as a seed:
Quite amazing how the AI finds the same tone of voice … and how utterly ridiculous the statement is upon reflection.
A perfect summary of the article.
Crikey!
You should do this for all Unherd articles. Sort the wheat from the chaff!
Honest people with some knowledge in programming or computer science will find this comment nonsensical, while other people may find it powerful because they get intimidated by it.
The demand for Far Right (to validate the far left?) continues to exceed the supply, even after scraping the bottom of the barrel.
Right wing:
– Take some fringe nutters
– Call them “far right”
– Conflate routine conservative views with the second called “far right”
– Malign all conservatives as supposedly backward
BLM, Islam, democrats etc:
– Those involved in violence, terror acts, grooming gangs, joining ISIS are “radicals”
– Somehow those radicals are viewed separately from “normal” members of the group: even though those “normal” share the same views and support their tactics
– Absolve those groups of all blame. “Not all XYZ do that, you phobic / racist etc”
Nazism (and therefore neo-Nazism) is the far left, not the far right. Confusing the right with the left may explain some of the author’s other surprising claims.
Nazis accepted private property and valued things like loyalty to the nation and heroism. They cooperated with the capitalists who incidentally still for the most part exist today as they did back then (e.g. Siemens paid a large sum of money to the descendants of the slave labourers they used at the time). Given these, I’d argue Nazis were part of a “progressive-right” which doesn’t exist in explicit form today as far as I know. In that sense, there’s probably an argument to be made that today’s Progressives while including parts of the identitarian left are concealing a progressive-right element within. The subtext of this earlier article, in my view, may have been about that:
https://unherd.com/2021/12/why-macron-is-a-superman/
I’m not surprised that this is happening. In their embrace of managerialism, feminism and sexual politics, Western societies have become simultaneously decadent and boringly safe. Young men need ways in which to prove themselves and our societies no longer provide this. I even think it’s safe to say that many boys these days are raised in an environment that acts passively aggressive toward them. Corridors of upward social mobility are being closed off to them, and even a college degree is no longer a surefire ticket to a fulfilling career.
A society that turns against its men should not be surprised when its men turn their backs to it. Many educated people believe that Judaeo-Christian patriarchic norms were originally put in place to control women. That may be true to a degree, but they were mostly there to encourage masculine virtues like honor, kindness, gentleness, and self-sacrifice upon which women could safely rely upon to raise a family.
There is some nefarious zeitgeist in the West that hates tough-minded men and would rather that they gaze self-absorbedly into a mirror while crying about not being born into the correct body and wasting their lives away on ‘fixing’ themselves.
Great article. Denying the spiritual dimension is disastrous. We are dependent on metaphysics as much as air, food and water given our inability to comprehend the origin, purpose and meaning of existence. Rationality and science are nowhere near enough on their own.
Your point becomes more obvious by each passing day. I pray for the reformation.
Thanks for the interesting and nicely written article. I’d take issue with the last few sentences. I’ve never had the impression that conservatism even slightly excludes those wishing to defend the sacred. Especialy not on a grassroots level. One of the main reasons Unherd is now my fave news site is that a substantial portion of the mostly conservative commenators here (BTL, but also some of the feature writers) are staunch defenders of the sacred.
Id agree it would be great if there was more re-sanctification / re-invigoratoin of the sacred by high profile conservatives (& LW politicians for that matter.) Youtuber Scott Mannion is great on the practical details of what this means. But I’d think even if all the leading lights got in on this, extreme Islam would still be attractive to some on the alt right. For example, even back in 2019 when I was looking at incel forums, I saw near majority respect for extreme Islam from the forum members, and this apparently had nothing to do with the sacred (I seem to remeber their own internal polls showed about 90% of them were unbelievers). It was more related to their view that without controling social forces like fundementalist religion, low status men are much more likely to miss out on sex and love. PS – not trying to say all incels are all alt right – some of them are even socialists, but there does seem to be considerable overlap.
I really liked this article for its clarity of the concepts it discusses – kudos to Unherd for finding such talented writers as Ms. Partridge. The key point the author makes for me is the astute observation that, Islam appears to have the strongest backbone in the West (particularly the English speaking West) for pushing back against Enlightenment narratives – both liberal and (left-wing) progressive.
Earlier I was taken by surprise reading Unherd founder Paul Marshal’s article taking the stance in standing up for the (pre-Enlightenment) Christian tradition as Roger Scruton might have (reading this article now).
An interesting cross-road here may be whether Christianity can find an accommodation with Islam (and vice versa). Consider that Islam wasn’t always seen with such hostility in conservative circles. Muslims were seen as the trustworthy citizens of the empire in colonial India. Muslim lands have been invaded by Westerners, their resources (e.g. oil) effectively commandeered, and just looking at the past few decades an astonishing number of civilians have been killed and written off as collateral damage in Syria, Libya, Afghanistan, and Iraq even to this very day in some cases. With pax-Americana on the back foot, we no longer hear about the “Global war on terror”, therefore the demonisation of the Muslims has ended. With Wokeism on the rise, one is more likely to hear about Islamophobia than Islamist terror in main stream media which is such a change to 10-20 years ago. An unexpected side-effect of this may end up being the rehabilitation of the Muslim.
Interesting question you ask about whether the two Religions can find an accommodation. However, as long as fundamental Islam is preached, I can not envision a path to that outcome. It’s hard to live side by side a massive group of people who literally believe the other is an infidel and must be eliminated.
Very interesting, well written, thought provoking piece. Thankyou.
Looking for traditional ideas in the mainstream culture or politics might be possible in Poland. They march in great numbers there for God and family there. In Dublin, Ireland, in a city square, a sea of young ladies greeted with enthusiasm the result of the abortion referendum there a few years ago. Not a hijab-wearing lady in sight (as one might predict with great confidence). A sea of indigenous young ladies saluting progress was the news footage beamed around the world. Dare anyone else young there disagree with them! I could not imagine such a cheerful reaction in Catholic Poland, even if an abortion referendum were held there and passed. Has there been? The one Irish county that had tainted things by voting against abortion, Donegal, was put down to the fact that its young people had left that remote and peaty place in order to find work — with the result that the presumed backward old-timers that were left made up the bulk of the voters.
The article here by E Partridge is a very thoughtful piece. The defence of the sacred, or even the culture of speaking up for it, must not be allowed to drift off or be scorned as backward and ancient in these supposedly enlightening times.
Perhaps the Taliban are patting each other on the back, crying out “Now we’re going places!” The fringe far-right elements who have, as the piece here puts it, misappropriated the unmoored and drifting-downstream ideological debris of devalued Western or conservative traditional values, are also doubtless patting each other on the back. They see themselves as “the boys” now. They may envy the Taliban as already men. A sneaking regard for them.
The EU is seemingly working on how to make Christmas more invisible. It has recently had to go back to the drawing board, its tail between its legs. But it is determined to succeed here.
No doubt the Right and the Left are both as eager as each other to forget Christmas once the January sales begin. Or, in America, after Thanksgiving, when Black Friday begins.
What a world, eh?