The collapse of the banking system and the recent phone-hacking scandal have led some to question the wisdom of market forces. In a now famous piece in the Telegraph, Charles Moore considers whether the Left were right all along about the free market being a 'set-up' designed by the rich for the rich. He argues that 'Everything is different now' - but is it?
In the post-war period the Conservative party was haunted by the memory of the 'hungry thirties' - a period of mass unemployment. This was compounded by election defeat in 1945, viewed by many on the Right as a delayed verdict on their economic policies before the war.
Across public policy, especially nationalised industries, industrial relations, and economic management, the Conservative party ceded ground to the Left. Churchill focused his fading energies on establishing his position as an international statesman. The grand old man was not prepared to risk his reputation over a battle with the unions, and every effort was made to avoid confrontation. Tories fond of State planning like Harold Macmillan, sidelined before the war, were now promoted.
But had things really changed? As Andrew Roberts has argued, instead of treating the 1945 election as the freak result it was, Tory politicians were emasculated by it. They drew the false conclusion that it represented a turning tide which they were unable to hold back, even if they had wanted to. A generation of Tories were swept along.
There is a danger of the same happening again. Most Conservatives believe that spontaneity is preferable to state direction, and that variation and competition lead not just to higher productivity but to a richer society. I assume that Charles Moore still believes these things. What disappoints me is his willingness to buy into a left-of-centre narrative of recent events. The idea that people's confidence in the market has collapsed is a false conclusion and an erroneous premise upon which to base policy.
Some of those who benefited the most have certainly abused their power. Rupert Murdoch, once the heroic defender of a free press against union intimidation, has presided over (unknowingly or otherwise) allegedly illegal practices at some of his newspaper titles. Bankers made reckless investments tied to the US subprime market. Some of our largest banks, with proud histories, were forced to go cap in hand to the treasury. These are indelible stains on capitalism's record but the lessons of the post-war period still stand.
Between the end of the Second World War and 1980 the British economy was in relative decline. Harold Macmillan's claim that we had 'never had it so good' and Harold Wilson's 'technological revolution' belied lacklustre productivity, rising inflation, and deteriorating industrial relations. Mrs Thatcher's governments changed all this and Britain gained lost ground against its main competitors.
Relatively unfettered markets and a light tax regime is the right economic approach and more compatible with democratic values than centralised bureaucracy. This creates jobs and increases tax receipts to pay for cultural and artistic pursuits. In a globalised market, those economies that are uncompetitive and protectionist will spiral into high unemployment and low growth, leading to sovereign debt difficulties, as Southern Europe is discovering today and Latin America discovered a decade ago.
In the 1970s, a new generation of economically liberal Conservatives made an intelligent and vigorous case for de-regulated markets. As the economy struggles to adjust to recent hardships it is the worst possible time to cede the intellectual high ground to the Left.
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