“Depend on it, when a man knows he is going to be hanged in a fortnight, it concentrates his mind wonderfully” as Dr. Johnson’s saying goes. This seems to have been forgotten by today’s political leaders, whether it be the US Congress failing to find a long term solution to their budget crisis, Silvio Berlusconi refusing to lead economic reform in Italy or Angel Merkel stubbornly prescribing immediate austerity to the Eurozone periphery. This forgetfulness can also be applied to the British Government, which has been lukewarm in finding structural solutions to the big economic problems even if it has been assiduous in finding national solutions to assuage the bond markets and vigorous in defending its financial services sector.
One cause for this is the natural conservatism amongst politicians and commentators that does not want to recognise either the social and economic reality in Britain or the level of the country’s integration into the global economy.
All sides of the political debate lack a credible long term narrative where the country could or should be going. Occasional opportunistic opposition manoeuvres from Labour aside, all parties are committed to the idea of fiscal stability and consolidation; a gentle slowing down of state activity compared to the boom of investment of the past decade. It is a coherent strategy built upon the immediate economic context but like the German strategy, runs the risk of sacrificing international harmony for national stability, something that on its own would be very damaging in the long term.
What, then, is on offer to go beyond this? UKIP and the right of the Conservative Party see liberation from the Continent as the priority, setting a vision of Britain once again as an independent behemoth bestriding the globe, leading in commerce and manufacturing might. While increasingly populist, this vision is more 1912 than 2012. While the sovereign debt crisis has revealed deep flaws in the EU and Euro this should be more a case for urgent reform rather than risky divestment and isolationism.
There are other traditional conservatives such as Lord Sterling who see the future in the finance sector and big business; a return to the system and ethos that contributed heavily to the current problems.
The Coalition wants to see an economy with more private sector dynamism but so far the emphasis is on getting through the current crisis and attempting to square the circle of competing tax and spend priorities of the Coalition partners. This is a laudable raison d’être but needs to be built upon for the second half of the Parliament.
As is the way with opposition, Labour have so far not offered any concrete vision but are developing an idea of a ‘New Economy’ which, looking at Ed Miliband’s recent speech to Progress could entail anything or nothing, but includes a banking bonus tax to pay for the reinstatement of the future jobs fund. In a way it would be foolish for Labour to promote anything more specific at this stage.
A mid-term launch of a comprehensive and long-term economic strategy could, however, do the Coalition the world of good. Given that much conservative economic thinking is on the terrain of the right of the Conservative Party and therefore unpalatable to the Conservative leadership, coupled with dwindling confidence in George Osborne’s vision of a balanced and competitive economy, there is a clear opportunity for a distinctly small ‘l’ liberal strategy to come to the fore.
Liberals already have the building blocks of this strategy, which should promulgate an economy not only recovered from the current crisis but irrevocably changed for the better. This needs to be a social and structural change; for far too long policymakers have failed to appreciate the interplay between economics and wider social issues.
Where liberal ideas are developed, for example on industrial democracy, welfare reform and banking reform, they need to be knitted together into a comprehensive narrative. Other areas where a long term goal is less clear, such as housing or the European dimension of economic development need to be the immediate focus of policy development. Together, these ideas could form an entirely new vision of capitalism.
This should, ultimately, also be an answer to those eurosceptics who crave the return of eroded sovereignty. If Britain wants to remain a force on the world stage, it has to produce a dynamic model that inspires radical change abroad, becoming a world leader in ideas.
Tom Smith is the Director of Liberal Insight