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Commentary 332 – April 2009
27 March 2009 (12:42:12)


Can the Tories honestly escape any blame for the financial crisis? It was the Tories under Margaret Thatcher who – along with Ronald Reagan in America – originally championed the market fundamentalism that ultimately led to the present crisis.

David Cameron’s apology for not anticipating the crisis was therefore sheer effrontery. His speech on 13 March was obviously intended to distance the Tories from the Labour government. As an apology it seemed synthetic but, if sincere, it was a bit late coming.

Presumably Cameron hadn’t noticed Vince Cable, who was warning for several years that the growing levels of debt were unsustainable. Cable was not alone. Other respected commentators were also raising the alarm.

Not that New Labour is innocent. It shares responsibility for this crisis because it reinforced the policies that allowed corporate and personal debt to spin out of control. Gordon Brown is wrong to claim that the British economy was fundamentally sound until it was hit by a calamity from abroad.

Cameron at least conceded that there had been a ‘cosy economic consensus’ between the main parties, but the thinking behind this consensus goes back further than he cares to admit. An honest critique is not possible without repudiating the neoliberal economic dogma that has dominated British politics for the past thirty years. Cameron has not recanted, so why should anyone trust him to manage the economy?

The Tories’ lead in the polls is the product of New Labour’s exhaustion rather than any new thinking. Since Cameron became leader, his party has failed to produce any serious big ideas. You would have thought this is an urgent requirement when the main pillars of Tory policy have just been demolished.

The global financial crisis has thoroughly discredited neoliberal ‘turbo capitalism’. Neoconservative foreign policy lies in ruins in Iraq. Atlanticism looks even less credible as an alternative to Europe, after the offhand gift by President Obama to Gordon Brown of some bargain bin DVDs. And Labour’s policies on crime continually outflank the Tories to the right.

What does that leave the Tories with? Their answer to the crisis, insofar as one can make it out, would turn a recession into a slump. One wonders how much longer they can keep a lead in the polls if they continue to be all spin and no substance.

The Tories’ dilemma is that they want to maintain the support of both their traditional ageing supporters and a younger, more progressive constituency. At some point between now and the next general election, they will have to make some hard policy choices, which will inevitably alienate one group or the other.

Tory poll ratings are high for now because voters are tired of Labour and want a change. As the main opposition party, the Tories are naturally perceived as ‘the alternative’. But this default position cannot last indefinitely without some credible policies.

The lack of credible policies is the Tories’ Achilles’ heel, but choosing such policies will open up splits among Tory supporters. The Liberal Democrats should exploit this weakness for all it’s worth.


An enduring puzzle of the financial crisis is why the Liberal Democrats seem reluctant to repudiate openly the neoliberal dogma that led to this crisis. If they genuinely wish to offer the voters a distinct alternative, what better way to make a clean break with the ‘cosy economic consensus’?

Most Liberal Democrats have never been fans of neoliberal economics but an influential minority continues to believe in this nonsense. There was no tradition of neoliberalism in the party until the start of this decade, when people such as Paul Marshall and Mark Oaten, and organisations such as Liberal Future and later Liberal Vision, began to lobby for it.

Dutch writer Paul Treanor defines neoliberalism as “a philosophy in which the existence and operation of a market are valued in themselves, separately from any previous relationship with the production of goods and services... and where the operation of a market or market-like structure is seen as an ethic in itself, capable of acting as a guide for all human action, and substituting for all previously existing ethical beliefs.”

In the neoliberal universe, markets are treated more as an object of religious devotion than merely as a useful mechanism. Ethics is reduced to calculations of wealth and productivity. Values like morality, justice, fairness, empathy, nobility and love are either abandoned or redefined in market terms.

This always was a bleak, heartless and illiberal belief system. And now it’s a busted flush. No wonder its adherents have failed to convert the party. But their continuing influence inhibits the Liberal Democrats from making trenchant criticisms of the ideology underlying the crisis. And this in turn prevents the party from sounding distinctive, which stunts its growth.

Nick Clegg has been making increasingly bold statements recently. If he wants to distance his party from the Con-Lab consensus, he should make another. He should declare that neoliberalism is a shop-soiled idea that has no place in the party, and that we should instead support a more human form of capitalism. And if a handful of zealots can’t handle this rejection, too bad.

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