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Sunday, September 27, 2020
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How to sell capitalism to the young

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WHEN we social conservatives read our papers in the morning, or pop online to see what’s happening, many of us find our attention diverted by the culture wars and the latest identity politics madness. We may fail to notice that more mundane things are also going awry that, as conservatives, we should care about. Why, for example, young adults are unable to afford to buy homes. Why people who are ‘in work’ make up a significant percentage of those using food banks. Or that red tape and regulation make it increasingly difficult to start the new businesses that will drive innovation and opportunity. How state intervention is sometimes the problem not the solution.

The Centre for Policy Studies (CPS), one of the UK’s oldest think tanks, founded in 1974 by Sir Keith Joseph and Margaret Thatcher, is not guilty of this. It has just published a paper by its director, Robert Colvile, entitled Popular Capitalism.

It makes the case for capitalism, as we need to do over and over again. But sensibly it also looks at how capitalism can go wrong, an aspect overlooked by some conservatives. Without addressing its weaknesses, the outcomes it can generate are hard to defend. People, especially young people, lose faith in it, particularly when they feel they are the ones who bear the brunt of the failings.

Colvile’s paper suggests policy initiatives to address this. It doesn’t claim that they are comprehensive; just good ideas for the Tories (or the Brexit Party!) once we have sorted out Brexit. Or even better, for implementation while we are sorting out Brexit to help make it successful.

Colvile enlists an unlikely ally to his cause, Karl Marx, writing about the achievements of the new capitalist middle class in the Communist Manifesto. It has ‘accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts, and Gothic cathedrals . . . it has conducted expeditions that put in the shade all former Exoduses of nations and crusades . . . The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together’.

So powerful were the forces of production and exchange that, according to Marx, they ‘burst asunder’ the fetters of feudalism. Here is Karl Marx (Karl Marx!) reminding us that it was capitalism that freed us from feudal overlords, and provided us with material wealth, choice, and opportunity undreamed of through most of humanity’s history.

What could possibly go wrong?

Well, it was Karl Marx who thought that in a capitalist system power would again accumulate in the hands of new overlords. Defenders of capitalism too rarely accept the elements of truth in Marx’s fears. Markets are not perfect. And ‘unfettered’, they can result in concentrations of power. When this happens you start to lose the wide sharing-out of material wealth, of choice and opportunity that capitalism at its best can provide.

Colvile believes that we are failing adequately to address these concentrations of power today.

With respect to industry, he says: ‘One of the great trends in our economy . . . is an increase in industrial concentration. In sector after sector, big firms are becoming bigger, and fewer . . . The problem occurs if we fall into the world of cartels and oligopolies. And a wave of research from the US and elsewhere is now linking corporate concentration to all manner of economic ills, from a lack of dynamism in the market to falling real wages, as disgruntled or underpaid workers face a reduced choice of alternative employment options.’

With respect to private wealth, particularly in the form of home ownership, Colvile says: ‘We are asking young people to embrace capitalism when they have no capital. We are telling them that competition is a wonderful thing, but denying them the table stakes to play the game in the first place. We are telling them that they should have control over their own lives – but not giving them the means to exert it.’

The report provides some extraordinary figures:

In 2015-16 63 per cent of Britons were homeowners, the lowest proportion in 30 years;
In 1990 approximately 40 per cent of those aged 20 to 24 owned their own home. Today that figure is 10 per cent;
A million more people aged 20-34 are living with their parents than in 2000.

Colvile points out the political implications: ‘The most likely predictor of whether a voter would swing to Labour, at the 2017 election, was not their age, but whether they rented or owned their home. This effect was powerful enough, on its own, to explain 77 per cent of the swing between the parties.’

He makes a powerful case that in order to preserve capitalism we need to harness it properly; that Conservative governments need to commit and recommit to opening up markets to competition, and ensure that people can access the requisite education and the financial capital that will enable them to participate fully in the opportunities a free society offers.

Finally, Colvile takes on the harder job of suggesting some kick-start policy initiatives. He is clear that these are only examples of the sort of things Conservatives need to have on the agenda to win people over, and to win elections. They are: raising the lower limit for national insurance payments to align with the income tax threshold (very sensible), offering small businesses the choice to pay a turnover tax instead of having to wrestle with VAT, PAYE, National Insurance, business rates and income tax (brilliant), a tax-break to encourage landlords to sell properties to their tenants (fiddling while Rome burns) and lowering the marginal tax rates as people come off welfare (very sensible).

You can look at these ideas, and the rest of the report, here.

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Caroline ffiske
Caroline ffiske
Caroline ffiske is a former adviser to the New Zealand Government, served two terms as a Conservative councillor in Hammersmith & Fulham and is currently a full-time mother. She tweets as @carolinefff

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