Tory crisis, capitalist crisis

Much has been written about the divisions in the Tory party and the realignment of the right. I'd be failing in my Marxian duties if I didn't link the Tories' troubles to the crisis of capitalism. So here goes.

For years, there have been - roughly speaking - two strands of Conservatism, which can coexist in the same person: a sceptical, melancholy strand which aims at managing decline; and a more programmatic one.

The latter - associated with Thatcherism, the Britannia Unchained crew and Tory defectors to Ukip - goes like this: if only we can shrink the state, cut red tape, get out of the EU and restrict workers' rights, we'll unleash the dynamism of British entrepreneurs and enjoy strong growth.

However, whilst this might have worked in the 80s, it's questionable whether it'll work now. If the secular stagnationists are right, capitalism has lost its mojo, and there's no underlying dynamism just waiting to be unlocked. And if wage-led growth theory is right, bashing workers might merely depress aggregate demand.

Herein, perhaps, lies a reason for the growth of crony capitalism, about which some Tories are sincerely uncomfortable; in secular stagnation with a dearth of monetizable investment opportunities, capitalism doesn't have the oomph to grow under its own steam, so it needs the state to create and guarantee sources of profits.

We can see the two strands of Conservatism as mirroring the question about whether secular stagnation exists. Programmatic Tories deny the problem and think that another dose of Thatcherism is sufficient, whilst the sceptical-melancholy tendency fears that we might be in a stagnant world so that free market policies won't work now even if they worked before.

Now, I'm not saying that the Tories are having the debate about secular stagnation and wage-led growth explicitly - merely that there's a close analogy between the debate on the right and the debate among economists about the underlying vitality of capitalism. Some Tories have always been good at understanding things tacitly and intuitively.

The question: should we massively shrink the state and leave the EU, or should we merely try to shore up crony capitalism? is rooted in a question about the very nature of capitalism. With the latter in doubt, conflict within the Tory party is to be expected. 

Comments

[Tom Griffin]

Have the programmatic tories actually set their faces against the industries with the most potential dynamism to be unlocked in the medium-long term: renewebles, electric vehicles, energy storage etc.

[Stevenclarkesblog.wordpress.com]

I agree with the division, but I'm not sure if you've got the right people either side of it.

The optimistic Thatcherites want a dynamic, capitalist society.

As Marx said:

"Constant revolutionising of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy is profaned..."

Thatcherism is not small-c conservative. The free market will eventually disrupt old ways of doing things and old social relations.

I suspect UKIP voters are those who fear this change and disruption - who hanker after a stability with the past.

Surely they are from the more pessimistic, Burkean strand of Toryism?

[Peter K.]

I don't know about the U.K. but I don't see secular stagnation in the U.S. The economy isn't doing well because of the trade deficit/strong dollar and government austerity. Also monetary policy is at the zero lower bound.

The rightwing policy framework of leaving it all up to the free market doesn't work. There are no dilemmas when it comes to government finances and inflation.

[Socialism In One Bedroom]

"I suspect UKIP voters are those who fear this change and disruption - who hanker after a stability with the past."

Not being the brightest/losing their faculties fast, the UKIP supporters don't really know the policies of UKIP (other than anti EU, anti Immigrant), which are in the spirit of free market. But the up side is that the workhouse will make a return, along with TB probably.

[Socialism In One Bedroom]

Incidentally I think this is stumbling amd mumbling its way to saying something quite profound, though I am not sure it is a reflection of capitalism in crisis but capitalism in the early stages of a new epoch.

[Guano]

John Redwood recently made remarks suggesting that business had in the past got policies completely wrong about Europe, that they had pushed the Tories to adopt these erroneous policies and that this had kept the Tories out of office after 1997. This suggest a fundamental split in the Tory Party, not just about Europe but about the role of business organisations in politics.

[Dave Timoney]

I think your intellectual admiration for Burke and Oakeshott leads you to assume that ideological projections ("sceptical, melancholy") have an actual reality in practice. Most Tories just aren't that sophisticated.

The phrase "capitalism doesn't have the oomph to grow under its own steam, so it needs the state to create and guarantee sources of profits" would stand just as well for Tory policy 120 years ago. Just substitute empire for welfare state.

The Tories have always been a fractious alliance of different capitals, all of which practice cronyism. The current realignment has more to do with the fallout of 2008/9, and the attempt to reestablish the power of finance capital, than any dawning awareness of stagnation.

[rogerh]

Those old hopeful days of Woomera, Dan Dare and UK dominance supported by a shiny Empire are long since pie in the sky.

I suppose if capitalism has lost its mojo it might appear to make sense to unload all non contributing factors - provided you realise the consequences. Here is my intuitive prediction for the shrunk state/leave EU option. The economy will collapse over about 10 years, unemployment soar and financial crises abound. After about 10 years desperation will force some new UK government into the loving arms of the EU and by then we can print King Charles' face on the Brit Euro. Or we can stagger on as now, I am not sure which is worse, neither way really solves anything. But leaving the EU could be good for the few who are quick on their financial feet - for the first 5 years.

[Ralph Musgrave]

Chris,

You claim that capitalism currently “doesn't have the oomph to grow under its own steam..” largely because of a new fangled and I think largely nonsensical new theory: secular stagnation. Keynes and others claimed (I think rightly) almost a century ago that the free market / capitalism left it its own devices will not guarantee full employment or as much growth as we could achieve. Thus there is nothing new in the idea that capitalism doesn’t have enough oomph.

[An Alien Visitor]

"Most Tories just aren't that sophisticated."

It isn't a matter of being sophisticated or not. It is more of a sub conscious argument taking place, or the views put forward are not within a philosophical framework but more clumsy, more off the cuff. But it still represents reality.

You appear to be making the mistake of assuming theory and practice are the same.

[jcee]

The UK has its unique challenges, not least on the housing front. A report by Shelter with input from KPMG forecasts that by 2034 average home prices in the UK will be over 930,000 pounds sterling. Capitalism is increasingly becoming a gun pointed at the head of the financially vulnerable. Some of the stories relating to the housing crisis -parents using funds set aside for retirement, remortgaging etc or providing shelter for sons and daughters who despite being employed can't afford a place of their own makes depressing reading.

How many years has it been since the financial meltdown? Not only has the elusive "recovery" failed to materialize, the situation is rapidly deteriorating. The dark cloud over the proceedings at the recent meeting of the European Central Bank speaks volumes.

[guthrie]

"The latter - associated with Thatcherism, the Britannia Unchained crew and Tory defectors to Ukip - goes like this: if only we can shrink the state, cut red tape, get out of the EU and restrict workers' rights, we'll unleash the dynamism of British entrepreneurs and enjoy strong growth.

However, whilst this might have worked in the 80s,"

Eh? I don't think it worked in the 80's either; Thatcher certainly didn't leave behind a smaller government, and any economy will grow after a few years if you first destroy it.