Nick Hargrave is a former Downing Street Special adviser where he worked for both David Cameron and Theresa May. He now works for Portland, the communications consultancy.
Philip Hammond’s speech to the Conservative Party Conference last October is unlikely to be remembered as a rhetorical classic. But it contains within it an important insight for the political fortunes of the Conservative Party and the long-term prosperity of our country.
Speaking to a less than packed hall, the Chancellor of the Exchequer told delegates that Conservatives of the future must:
“Harness the power of the market economy, taking a model which has evolved continuously down the ages, so that the capitalism of the twenty-first century looks nothing remotely like that of the nineteenth – and adapt it once again to speak to the values of a new generation.”
Hammond was speaking to a truth that Conservatives sometimes forget. Capitalism is not a static construct held in aspic. It is an economic system which flexes to meet the challenges of its time – and in doing so renews its mandate from one generation to the next.
This flexible conception of capitalism has been seen in the differing approaches of Conservative governments since the Second World War.
In the 1950s and 1960s, after a landslide defeat in 1945, our party accepted a greater role for state involvement in the running of the economy; spurred on by a gradual realisation that the laissez-faire approach of the 1930s had been an opportunity lost.
During the 1970s and 1980s, Margaret Thatcher burst onto the scene with an articulation of capitalism that was more libertarian and evangelical about the merits of free enterprise – in keeping with its time and a reaction to the drift and decline inherent in state involvement going too far.
The 1990s and 2000s saw the pendulum swing the other way, and voters demand a gentler articulation of the harder-edged approach of the 1980s – with support for a minimum wage, windfall taxes and more investment in the public realm. On this occasion, our party failed to meet this challenge, clinging doggedly to our post event conception of Thatcherism, and paid an electoral price.
The lesson of history is clear. When Conservatives adapt to generational calls for change on our political economy they prosper and own the terms of debate; more than capable of beating a Labour Party whose competence is usually doubted. When they fail to acknowledge the call for change they lose – and only regain power after a period of painful reflection.
If the events of the past couple of years have taught us anything, it is time for Conservative politicians to once again come up with a coherent answer for how capitalism can renew its generational mandate. Specifically, how it can materially improve the British people’s living standards in an economy that is undergoing a technological transformation; one that is increasingly global, that’s conducted online, that’s moving at pace to automation – and which is increasingly flexible in its conception of the nature of work.
It’s this transformation which is fuelling the rise of identity politics in our country – which for all its short-term attractions is unlikely to end well. It’s fuelling divisions between the upwardly mobile and the educated in our vibrant urban centres who are benefitting from this change – and the many in our towns and communities who feel left behind. Between a younger generation which is finding it hard to amass capital – and an older generation who have assets that have appreciated over the years. It’s why a lot of public and private polling out there indicates that people feel the country is moving in the wrong direction domestically. And it’s why the main thing keeping the current Conservative voting coalition together is the illusory tiger of a Brexit which can never meet the hype – and one suspects will eventually end in disappointment.
So what’s the real answer for Conservatives in how we reinvigorate capitalism in a way that is relevant for the 2020s and beyond – and in the process renew our own mandate to govern? This could be the subject of several more articles, but here are a few core thoughts as follows: