The Nice Party Turns Nasty?

In her foreword to the Green Party manifesto, Caroline Lucas suggests that the Liberal Democrats have dumped their positive attitude towards government intervention, in favour of the view that ‘the state is a problem’. The ‘nice party’, she writes, ‘have just got nastier’.


The implication that the party has abandoned its cuddly social liberalism in favour of a mean-minded economic liberalism is intended as a slight, but will be music to the ears of many Lib Dems.

Not least among these will be David Laws, who has been arguing for some time that his party’s economic liberal tradition has been suffering from benign neglect. In the opening chapter of The Orange Book, published in 2004, Laws wrote that between the 1930s and the 1980s the old Liberal Party had embraced ‘forms of soggy socialism’ at the expense of a commitment to ‘free market principles’. The Liberal Democrats now had to reclaim those principles.

If the Lib Dems of 2010 seem ‘nastier’ than their predecessors, one might think, it can only be because Laws’ project to restore economic liberal values to their rightful place has succeeded.

One might think that – but one shouldn’t, for two reasons. First, because you cannot reclaim something that you never lost. Although the party certainly did experiment with ‘soggy socialism’, the Liberals never dispensed with economic liberalism in the way that Laws suggests.

Through the 1950s and beyond the party provided a political home for numerous economic liberals – not just sometime leader Jo Grimond, but also figures like Arthur Seldon and Alan Peacock – many of whom played a significant role in shaping Liberal thought.

Publications like The Unservile State and Radical Alternative, although now long forgotten, show the clear imprimatur of these economic liberals.

Second, because any reassertion of ‘nasty’ economic liberalism that has taken place has not obviously dampened the party’s commitment to ‘nice’ social liberalism. The Liberal Democrat manifesto is more explicitly redistributive than its Labour or Conservative counterparts, and reveals an obsession with fairness which borders on the pathological.

Although the party may no longer have the headline-grabbing tax policies of 1997 or 2005 – no penny for education, no fifty pence rate for the highest earners – it is no less socially liberal for their absence. A pledge to cut tax for the poorest is arguably more progressive than a pledge to raise tax for the richest – though, as it happens, present Lib Dem policies would do both of those things.

None of which is to say that a Liberal Democrat government would be ‘nice’. Whichever party is in government after May 6th is going to be forced to make cuts, and Nick Clegg has already signalled his intent to be as ‘savage’ as the situation demands. But there is no reason to believe that the Lib Dems are any ‘nastier’ than they ever were.

Matthew Francis

Letters From Economists

"The tale of the 364 may simply illustrate that the backing of economists – though rhetorically useful for politicians – is not a reliable guide to good policy..."

Those following the on-going debate about how and when to reduce the deficit will have seen a letter printed in last Thursday’s Daily Telegraph. Signed by almost sixty academic economists, it is the second to back Labour’s plans to delay spending cuts until ‘the recovery is well underway’, and warned that Conservative plans to cut immediately could ‘imperil not only jobs but also the prospects for reducing the deficit’.

It serves as a response to similar letters from business leaders and yet more economists warning that the Labour Party’s approach to managing the economic recovery poses exactly the same risks as the Tory strategy for cutting the deficit.

Those with longer political memories, though, will recall a similar letter of March 1981, when Geoffrey Howe’s monetarist, deflationary budget provoked howls of derision from professional economists. In the depths of a recession and at a time of growing unemployment, Howe and Margaret Thatcher had proposed substantial increases in taxation alongside substantial cuts in public borrowing – precisely the reverse of the counter-cyclical policies advocated by the Keynesian economists who then dominated the profession.

The response to these measures was a letter to The Times, signed by 364 academic economists from universities across Britain, condemning the budget as having ‘no basis in economic theory’ and as posing a significant risk to ‘the industrial basis of our economy and… its social and political stability’. The signatories urged the government to ‘reject monetarist policies and consider urgently which alternative offers the best hope of sustained recovery’.

The letter had been signed by a cross-section of the most eminent names in economics – including James Meade, Amartya Sen, Alec Cairncross, and Nicholas Kaldor, alongside the present Governor of the Bank of England, Mervyn King (not to mention one of my former tutors) – and appeared to demonstrate the utter intellectual isolation of the government. When challenged, Mrs Thatcher was able to name two economists who supported the measures in the budget – her own advisors, Alan Walters and Patrick Minford – but one civil servant is said to have quipped afterwards that it was a good job she hadn’t been asked to name three.

Nearly thirty years on, however, the conventional wisdom would have it that the 364 economists were wrong and that Howe and Thatcher were right (although some of the signatories continue to defend their position). Although unemployment continued to rise, and would not peak until 1986, the prophesised depression never arrived. Indeed, an economic recovery began within weeks of the letter’s publication and seemed to make a mockery of the economists’ predictions.

The tale of the 364 may simply illustrate that the backing of economists – though rhetorically useful for politicians – is not a reliable guide to good policy. 

Matthew Francis

Cameron and the renewal of the 'property-owning democracy'

The Conservative Party has recently won considerable publicity by renewing a pledge to allow workers' co-operatives to own and run public services.In so doing, the party has been accused of 'stealing political clothes that will never fit them'. Co-operatives, it is alleged, are an intrinsically left-wing concept and will never be natural Conservative terrain - despite claims to the contrary by Jesse Norman, founder of the Conservative Co-operative Movement, and Phillip Blond, the 'Red Tory'.
But this is not the first time that Conservatives have entertained the idea of working with co-operatives, and certainly not the first time they have endorsed the notion that employees should have a stake in the ownership and/or the management of their workplaces. That idea dates back to the 1920s, when such schemes were proposed by the Conservative MP Noel Skelton as the solution to a 'lop-sided' distribution of property.
Skelton - whose writing has been an acknowledged influence on Blond - observed that the reforms of the nineteenth-century had left the 'working people' with their political rights and educational status much enhanced, but their economic status unaltered. For Skelton, this 'imbalance' accounted for much of the social and industrial unrest of the interwar period - not to mention the rise of the Labour Party - and a vast extension of property-ownership was required if British society was to be restored to equilibrium. His preferred means was the introduction of industrial co-partnership schemes, which would give ordinary working people a shareholding in the company for which they worked (including a portion of the profits and the possibility of seats on the board). This platform offered the Conservative Party 'the ideal ground on which to fight Socialism'. And Skelton even had a name for the type of society which would emerge as more and more working men became owners - he called it the 'property-owning democracy'.

The Conservative Party displayed little initial enthusiasm for co-partnership, but the principle of extending ownership (and particularly the idea of the 'property-owning democracy') was seized upon as a powerful political weapon. In reviving the concept at the 1946 Conservative Party conference, Anthony Eden noted that the extension of private property ownership offered a 'constructive alternative' to the policy of nationalisation pursued by the Labour government. By the 1950s, however, the focus had shifted away from industrial capital to housing. Although the Conservative Party was still committed to wider distribution of property, it had now come to the conclusion that, in the words of Minister for Housing Harold Macmillan, 'of all forms of property suitable for such distribution, house property is one of the best'. The party was also no doubt aware that homeowners were more likely to vote Conservative than private renters or council tenants.

Although housing continued to play a role in Conservative attempts to create a 'property-owning democracy', under Margaret Thatcher's leadership the party rediscovered an interest in the ownership of industry. By making shares in newly privatised industries available to the general public, the Thatcher administrations hoped to create a 'capital-owning democracy' in which ordinary people would become shareholders feel a 'heightened sense of pride in British business'. Together, the privatisation campaign and the 'Right to Buy' formed the centrepiece of a strategy to extend property-ownership to all levels of British society - a goal which Mrs Thatcher referred to as 'the great Tory reform of [the] century', and which the plans for a 'peoples' bank bonus' suggests is still a Conservative objective.

Plans to allow workers' co-operatives to own and run public services are merely the latest manifestation of this longstanding theme in Conservative ideology - a fact implicitly acknowledged by George Osborne when he compared the proposals to the sale of council houses. And by offering public sector workers the opportunity to own and run the services which they provide, David Cameron could arguably come closer than any previous Conservative leader to fulfilling Skelton's vision.

However these proposals have not descended directly from Skelton, but rather draw on numerous Conservatisms - including Thatcherism. Although Cameron and Osborne have been careful to sell the policy as 'progressive', the detail of the proposals - from the Conservative Party, and from think-tanks ResPublica and The Innovation Unit - has been couched in the vocabulary of the market. They have relied on many of the same justifications as the privatisations of the 1980s - efficiency, productivity, and the needs of the 'service user'. The plans also allow considerable room for private sector involvement - either in managing the co-operatives or as partners in a 'joint venture'.

Warnings that we should be careful to 'count the spoons' are, therefore, entirely justified. Although these plans have been sold - and so far bought - as 'progressive', they are far from unambiguous. Co-operatives may mean more independence for our public servants - or they may represent a form of back-door privatisation. Are these just warm words from a Cameron still trying to appeal beyond his party's natural constituency? Time will tell.

Matthew Francis, PhD student in the School of Politics and International Relations