John Marriott: How do we create an economic and political system for the many?

Political party conferences nowadays tend to be febrile, incestuous affairs that have little relation to reality and more to do with show business. Most are stage managed to the nth degree (nearly always) in order to paint the party in the best light. Policy making has no longer much of a role to play. Political anoraks love them.

Most of us just ignore them. Personally speaking, as a fairly engaged ‘politician’ for over 40 years, I only ever attended one. This autumn’s crop has followed the pretty dismal pattern, except in one aspect. For the first time in decades, politicians of the right have actually felt it necessary to defend an economic and political system that has been more or less the only show in town since the demise of communism nearly thirty years ago.

As we emerge from the conference season we face a fractious world both here and abroad. Besides the recent mass killings in Las Vegas, the disgraceful scenes in Catalonia, not forgetting the continuing conflict in the Middle East, the really hot topic amongst political analysts here appears to be the rise and rise of Jeremy Corbyn, and, knowing his politics, whether capitalism has had its day and whether socialism is about to stage a comeback, at least on these islands.

Well, we do appear to be back to the kind of two party politics of the left and right we last experienced in the 1950s and 1960s, not that there was a massive philosophical divide between them when Butskellism was the theme music until Lady Thatcher came along.

It might be the case here; but socialist parties and their ideas do appear to be losing support elsewhere, particularly recently in Europe. However, it’s clear that all is not rosy in the capitalist garden either wherever you look. When many thought real socialism had been dead and buried in the UK for years could it really be on the way back?

It would appear to be our experience with austerity that has given socialism and its followers a new impetus. However, after nearly eight years of belt tightening in an attempt to cut our country’s massive deficit, firstly in coalition with the Lib Dems and, since 2015, more or less on their own, the Conservatives would still have us blame the last Labour government, which most socialists would frankly disown, for all our current woes.

As both Tories and Labour were largely singing from the same hymn sheet in the early noughties, it would seem somewhat unfair, although we do remember Lord Mandelson’s famous comment about being “intensely relaxed about people getting filthy rich as long as they pay their taxes”.

What I do really blame Blair and company for was their failure, given the two massive majorities they secured in 1997 and 2001, radically to reform our democratic institutions when they had the chance. Instead, afraid possibly of the reaction of the so called middle classes and the movers and shakers in the city, whose support they had successfully courted and knew they had to retain to stay in power, they became a kind of Tory ‘lite’ with what passed for a social conscience.

The cause of the UK’s current financial predicament began way before 1997. You could argue that it started when Victorian factory owners started to encourage their sons to choose the civil and diplomatic service and banking as a career rather than getting their hands dirty running the family business.

Let’s not forget our failure to invest in new plant and to tackle low productivity after the Second World War. Then there was our unwillingness to recognise our reduced world role following the dismantling of our Empire and to change our game plan accordingly. You can add to that the failure of management to plan for the long term and the rise of trade union militancy, perpetuating the ‘them and us’ philosophy abandoned by many of our competitors, starting in the 1950s and reaching a climax in the 1970s.

Finally and crucially was the dismantling of much of our manufacturing base under the Tory governments of the 1980s and excessive reliance on financial services, following the deregulation of markets, as a means of wealth creation, which was largely made possible by the bonanza of North Sea oil. Is there any wonder, given the structural weaknesses in our economy to a great extent masked by our membership of what morphed into the EU, that some of us view a hard Brexit with less than unalloyed delight.

To anyone under the age of 40, the ideas in Labour’s current manifesto, which were further fleshed out at its recent conference, would seem unbelievably attractive, indeed common sense. In fact, in an ideal world, they would largely get my support as well. But some of us are old enough to remember the 1970s when many of these ideas were still an active part of the political scene.

As I have often observed, many Brits expect Scandinavian levels of public services while paying North American levels of taxation. Our basic rate of Income Tax is currently 20% for incomes over £11,500, 40% for incomes over £45,000 and 45% for incomes over £150,000. Things were very different over 40 years ago.

In 1975 the basic rate was 33%, with nine incremental rises up to a maximum of 83%. In addition Chancellor Denis Healey had just doubled the rate of the recently introduced VAT to 25%. Yes, I know that the world at that time was still reeling from the quadrupling of oil prices and the benefits of North Sea oil had not yet kicked in. Many would argue that joining and staying in the European Economic Community aka the ‘Common Market’ together with the arrival of the International Monetary Fund probably saved our bacon in the interim.

The weakness of Labour’s present stance is the assumption that you can achieve the kind of provision that most civilised people would support simply by taxing the rich or by adding to our debt burden. On the other hand the weakness of capitalism, as currently practised, is the assumption that, if you allow a small number of people to get “filthy rich”, their wealth will ‘trickle down’ for the benefit of the rest of us. Really? While socialism might seem exciting and new to those people who have never experienced it in action the examples of its successful application in the long term are few and far between. Oil rich Venezuela is the latest example of a socialist state gone wrong.

Whatever system we support it will only work if it can effectively balance as far as possible the needs and legitimate aspirations of the individual with those of society in general while still allowing the flexibility needed to create wealth and have an internationally agreed set of rules to make sure that people play fair.

Get those rules right and you could have a winner. The consensus between nations outside the Iron Curtain that emerged from the 1944 Bretton Woods Agreement stood the post war world in good stead for many decades before it broke down. The major difference then was that the number of big economic players was far less than it is today.

Perhaps we need a new Bretton Woods based on modern circumstances if the governments of the post Cold War world are prepared to stand up to the multi nationals, who seem be ruling the roost at the moment and to close the tax loopholes and havens that have allowed corporations and individuals to cock a snook at those who agree to play the game by the rules.

In the meantime until the nations of the world hopefully come to their senses, what we surely need here at home is willingness from ALL of us who pay income tax to pay a little more if we want more of those Scandinavian level public services.  A 1% rise in all levels of Income Tax, for example, would raise around £5.5 billion. Provided that the money is wisely spent, I think you could persuade most people to part with a little more. However, the sort of levels of increase required to finance all the current Labour manifesto promises would be stretching that goodwill too far.

Capitalism, in the form of the free market, has proved to be the best means of making money without which very little can be achieved unless we ratchet up even more debt. On a broader front the need to come to terms with the casualties of unbridled capitalism, together with the threat caused by global warming and feeding an exploding world population are just three of the major challenges facing us all in the 21st century wherever we happen to live.