Jesse Norman attacks 'crony capitalism' and warns of a 'Nasty' decade – Noxious Austerity Stretching Ten Years
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Jesse Norman, one of the leading intellectuals among the new intake of Tory MPs, says Britain is entering a 'Nasty' decade – Noxious Austerity Stretching Ten Years
I prompted a little debate on Twitter last week when I bemoaned the lack of big beasts in today's political world. It was generally agreed that none of today's leaders is in the same league as the likes of Denis Healey, Barbara Castle and Michael Heseltine.
But we missed one thought. Junior beasts from the 2010 intake of MPs are starting to stalk the jungle in an increasingly impressive manner.
On the Labour side Chuka Umunna, the shadow business secretary, is making a mark after his appointment to one of the most senior roles in the shadow cabinet. Liz Kendall, the shadow social care minister, showed last week why she is going to be a major force when she published a survey which showed the soaring costs of care homes. Stella Creasy, the shadow home office minister, has possibly had a greater impact than any other backbench MP in the last year after mounting a highly successful campaign against unscrupulous companies providing payday loans.
On the Tory side the leadership is finally using the talents of John Glen, the MP for Salisbury who once held the coveted post of director of the Conservative Research Department. Glen, who is wrongly overlooked in profiles of the 2010 intake, will be a serious contender for high office in the next decade. Andrea Leadsom, the former head of corporate governance at Invesco Perpetual, is rapidly emerging as a major force as the co-chair of the cross party All Party Parliamentary Group (APPG) for European Reform.
Jesse Norman, a former director of BZW who advised George Osborne in opposition, has shown why he is regarded as one of the leading intellectuals on the Tory benches with a new paper on what he calls "crony capitalism". Norman's paper, which he explained in an FT article last week, is a highly significant contribution to what is likely to be one of the main debates of 2012.
This is the key passage:
In short, capitalism relies on, and so demands, trust. It does not exist to make the rich richer.
But there is a huge But. This is real capitalism, capitalism as it's supposed to work. That's not the capitalism we have in the UK at present. What we have now, in large parts of the UK economy, is crony capitalism. Not only that; we have failed to reflect on, let alone reach a public consensus on, the difference between real capitalism and crony capitalism, and the nature of capitalism itself. For many people capitalism has been identified with the rampant financial speculation that got us into the present mess in the first place. It has therefore come to seem both inevitable and deeply unattractive. Yet socialism and communism have failed. Thus the root cause of the current wave of huge social anger at bank bonuses and financial malpractice is precisely the fact that, however harsh and unfair capitalism may appear, no-one can articulate a remotely plausible alternative. Little wonder that protesters have occupied St Paul's for so long.
Again, the truth is very different. There are many varieties of capitalism. Without realising it the free-market West, most notably the US and the UK, has sleepwalked into a species of financial crony capitalism that has disguised economic reality, shielded underperformance, cosseted poor management and leached away value.
Norman then has this arresting phrase to describe Britain's future after what Sir Mervyn King called the NICE decade:
During the 1990s, when growth was at a premium...the UK coasted through the NICE decade – the decade of Non-Inflationary Continuous Expansion. Now, however, we are well into the NASTY decade: Noxious Austerity Stretching Ten Years. It may not prove to be that long. But however long it is, the policy response to the UK's current economic malaise cannot simply consist of measures to restore growth and battle deflation. Rather, the goal should be to wake up and smell the coffee: to address the economic realities of the 21st century by changing some of the key features of our market economy and, especially, our culture over time.
Norman's contribution, highlighted by Patrick Wintour in his review of 2011, is significant because all the main political parties are attempting to fashion an argument about what Ed Miliband is calling responsible capitalism. Vince Cable, the business secretary, triggered the latest debate in his speech to the Liberal Democrat conference in 2010 on unregulated capitalism when he said:
Capitalism takes no prisoners and kills competition where it can.
Miliband picked up the theme in his speech to the Labour conference last year – in the same hall in Liverpool where Cable spoke – when he drew a comparison between "predators", whose conduct compares unfavourably with that of "producers". The Labour leader was criticised last month by Tim Allan, a former senior aide to Tony Blair, who wrote of "misguided anti-business rhetoric".
Allan's remarks echoed the Tory attack on Miliband who was mocked by David Cameron for his suggestion that he would vary tax rate according to whether a business was a "predator" or a "producer". But the Tories clearly fear that Miliband is developing a compelling theme, as the prime minister made clear in his New Year message when he made clear that he would soon take action against excesses in the City.
In language which shows that Norman's pamphlet has been read with great care in No 10, the prime minister said:
I will be bold about working to cure the problems of our society. While a few at the top get rewards that seem to have nothing to do with the risks they take or the effort they put in, many others are stuck on benefits, without hope or responsibility. So we will tackle excess in the City just as we're reforming welfare to make work pay and support families.
Excessive pay is identified by Norman as one of the two key features of crony capitalism. He identifies those two features in these terms:
• Business activity loses any relation to, and often clashes with, the wider
public interest; and
• Business merit is separated from business reward.
But there are deeper reasons why the Tories feel they need to speak out against crony capitalism. They are nervous that they are seen as the friends of the City. Norman addresses this by saying that crony capitalism has no place in the Tory tradition as he draws a distinction between free market neoliberalism and free market conservatism:
Making the case for real capitalism...will inevitably involve a degree of soul-searching for Conservatives. It means distinguishing between the ideology of neoliberalism and the insights of classical liberalism that have often inspired Conservative politicians. It means insisting on the importance of free markets, entrepreneurship and competition. But it also means acknowledging that good government and values of decency, respect and long-term thinking may require restraining "animal spirits" and reshaping the laws and institutions in which markets are embedded.
Nevertheless, the emergence of crony capitalism shows why, in the coming battle between free market neoliberalism and free market conservatism, we must choose free market conservatism.
We will no doubt hear more from Norman over the coming year as members of the 2010 intake provide Cameron with some intellectual ballast as the Tories work to ensure there is as little space as possible for Miliband. Downing Street believes the Labour leader is too left wing to connect to the British people. But some in No 10 do admire his brain.
Miliband has one thing in common with No 10. He, too, is making best use of the 2010 intake.