Saturday, 23 January 2016

Tim Montgomerie perhaps needs to learn the difference between business and markets


Montgomerie is on about Donald Trump and, in the main his little article is pretty much spot on. Except for this bit:

Conservative Brits may look on in amazement — but it’s worth remembering that Trump does have a point. It wasn’t Karl Marx who accused leading business people of being ‘all for themselves, and nothing for other people’. It wasn’t Friedrich Engels who condemned the ‘mean rapacity’ and ‘sneaking arts’ of many merchants and manufacturers. It was Adam Smith. The father of modern economics wasn’t an uncritical defender of free enterprise. He knew that markets could lead to extraordinary selfishness.

Or rather the last bit. Markets, where they are allowed to operate freely, are not selfish because they depend on the mutual benefit to buyer and seller. Nor was Adam Smith against free markets or even critical of free markets. What Adam Smith hated was mercantilism and the cartel, the core economic position of what I call 'business conservatives'. Sometimes this gets called 'crony capitalism' (a term widely used to illustrate what goes on in the US system and in the EU but was first coined to describe the rapacious kleptocracies of Marcos in the Philippines and Suharto in Indonesia).

We should be now have learned the lesson Tony Blair taught conservatives - that the old adage of the business conservative, "what's good for business is good for the nation", doesn't apply. It is what is good for consumers - for the people - that matters and we know that, in economic terms, 'good for the people' almost always equates to free enterprise and free trade. What Smith railed against was that businesses clubbed together to fix markets, that they pressured governments to introduce protectionism, and that they supported regulations that prevented new competition from developing. For Smith free trade and free enterprise were the solution not the problem.


1 comment:

asquith said...

I don't make the mistake of thinking Blairites were economic liberals, they were corporatists. But my accusation is that Tories are no better.

I hope you'd agree with me on the question of agricultural subsidies, and I don't think it's right to just blame the EU, which is bad but I think Cameron's post-Brexit policies in this area would actually be worse.

People ask me, when I'm amongst socialists and left-leaning greens, why I'm an economic liberal, but I tell such people that in fact a consistent liberal is more green and generally better than a socialist, and unfortunately the Tories are no one's idea of a liberal because they underwrite bad policies in this department by their farming mates. (et passim).

I really feel that with the likes of Neil Parish, Richard Benyon, and all of it overseen by Liz Truss, who I certainly don't support, the government are guilty of corporatism.

The accusations Tim Montgomerie apply to the Donald. New Labour are the masters of this, but I say that Dave is no better in reality. It is a very thorny issue but I deny that we have free markets now, we'd probably better off if we did but I hope you'll agree we need to demand more in that department from people who show reluctance to respond.