We are being treated to a clapping seal show presented as the Conservative leadership contest. The only candidate likely to alter Britain’s course into the iceberg of national decline and total senescence was Kemi Badenoch, so of course the MPs ejected her from the contest before the final three. For a moment it looked like it would come down to a face-off between Penny “Tory Blair” Mordaunt and Rishi “Green Card” Sunak, but instead we get Sunak vs Liz “Thatcher LARP” Truss. And of course, we are now witnessing the virus of zombie Thatcherism having colonised the brains of our prospective new prime minister. Each desperately tries to out-Thatcher the other, displaying the degeneration of the Conservative mindscape into a derivative pile of philosophical junk. It used to be that the Tories actually had ideas about how to govern and how to use the state to do this. Not anymore.

The Situation

Let’s survey the devastation of British national life. Inflation is at 9%, the highest for forty years. Energy prices are already a disaster, and are set to become truly catastrophic in the autumn and next winter. Productivity, bumping along for decades like a sea slug on the ocean floor, is falling into the Mariana Trench. Our levels of private debt are rocketing into the stratosphere. Our public debt is in orbit after the Covid-19 spend binge. Poverty rates are climbing and set to go even higher. The consequences in learning loss from Covid school closures for hundreds of thousands of children is an absolute disaster. A million immigrants settled here last year. Five million people have simply dropped out of the workforce and now subsist on benefits. Thousands of children have been abused, trafficked, raped, and even killed by grooming gangs. We lag behind other European nations for going back into the office. Quality of service from companies in the private sector and public services in the state sector has thudded face-first into the earth as a result. Our sainted health service is performing the worst it ever has, and is a black-hole of funding. The organs of the state have ceased to function: passport and driving licences are apparently a luxury rather than a necessity, while the main goal seems to be implementing ever more diversity and gender quotas. Our state capacity is therefore that of a poor south European country without the compensation of a pleasant climate.

The Solution?

And what is the answer presented to all of this? Why, tax cuts of course! This isn’t the sum total of either finalists’ policy proposals, but these are the prescriptions to our economic and social dis-ease that are being touted most vociferously by Liz Truss, the likely winner. And why would they not be? It’s always an attractive piece of political casuistry to tell people you’ll take less of their money one way while they’ll go on losing it in so many other ways. Given the British tax burden is the highest it’s been since the Second World War, this route to party popularity must seem like too good a golden road to electoral survival to miss. Never mind that the economic rationale for cutting taxes isn’t … completely watertight. It’s a sign of our political disconnect from economic reality that Sunak’s arguments against cutting all the taxes all the time has gone down like a lead-lined lifejacket with his prospective party voters. No, we must all hail our saviour Truss for her faith in the Laffer curve, an economic truism worked out on the back of a napkin and further distorted by politics towards the simplistic formula tax cuts always = higher tax revenue. Never mind that the ideology she adheres to represents the dissolution of social ties and the proletarianization of the middle class. Truss is a revolutionary in the mould of her hero Cromwell, a man who committed regicide. Yay, conservatism!

This tax-cut obsession underpins a religious vision where the small state is the worldly heaven towards which we must sacrifice and strain our sinews, an eternal truth applicable to all times and circumstances. The goal is to further liberate the individual from all bonds and constraints, enabling them to achieve this worldview’s highest good of maximum autonomy, never mind the social and cultural dissolution and chaos that it unleashes. Of course, since Thatcher’s time Conservatism as a party phenomenon has been seen as economically liberal, with nods towards some sort of cultural conservatism. This always amounts to little more than a rhetorical sleight-of-hand to distract from the economic preferences of the party elite, who themselves find the social conservatism of their members and those voters in the Red Wall embarrassing and morally retrograde. The Conservative vision of political-economy, culture and society is as impoverished as those it rules without governing are fast becoming.

Out of Ideas

What makes this all the worse is that when J.S. Mill epitomised the smug, self-congratulatory liberal style by calling the Conservatives “the stupidest party,” this was not actually true. But now the leadership candidates’ vague gestures at imitation Thatcherism looks set to prove Mill right. And yet it wasn’t always like this, and does not have to be like this. E.H.H. Green, in his magisterial historical survey, Ideologies of Conservatism, demonstrates that while the Conservative party may indeed not be as philosophical in a formal sense as the left, to say that Conservatives have always been an intellectually barren party is simply wrong.

As Green writes, “Study of Conservative intra-party debate throughout the party’s history, and especially over the course of the ‘Conservative century’, reveals that the controversy over Conservative ideas in the last quarter of the twentieth century was not unique in terms of either its nature or intensity.” The Conservatives at the century’s beginning debated tariff reform, social reform, land reform, industrial and agricultural productivity, Ireland and Empire. 

Intra-party debate continued up through the 20^th century, carried out in books, public and private party pamphlets and papers, speeches, articles and newspaper columns, as well as two book clubs, along with the Ashridge college of political philosophy. As Green rightly argues, “it may be that the Conservatives produce fewer ‘great texts’ (although they produce and refer to more than is frequently assumed), but if one sets aside the formal, ‘canonical’ notion of the forms of expression of political thought and examines speeches, policymaking discussions, exchanges of views and opinions in correspondence, and the construction of and response to legislation, the Conservatives’ engagement with ideas is clear, rich, varied, and extensive. Politics is about argument, and arguments are about ideas.”

This intellectual ferment was driven both by an innate interest in ideas shown by significant minority, and in reaction to changing events which demanded empirical observation and adaptation. This stemmed from a sense that to govern a great nation was a weighty and serious matter, fraught with danger and risk, one’s greatness not to be taken for granted or put at risk for ideological whim or purity. Leaders of the party actually thought things through in some depth. Even Prime Ministers engaged with the questions of the day with a depth that is incomprehensible in our time. Harold Macmillan wrote books on political-economy that reduce many such contemporary efforts to toilet paper status.

Thatcherism came from the more liberal side of the Conservative tent, but as Green wrote, it grew out of a scene rich in debate and discussion and had intellectual firepower behind it, whether one agrees with the substance or not. The network of thinktanks discussed in Richard Cockett’s book Thinking the Unthinkable communicated ideas from liberal thinkers like Hayek and developed policies from them. One can see these organisations as following in the wake of earlier arguments and institutions, seeing them as an example of what could be achieved and what to achieve it for. Now the Conservatives either serve up stale neoliberal centrism or cosplay Thatcherism.

Another Way

As Aris Roussinos recently argued, the cramped vision that the Conservative party now offers is far from the full picture, and does not have to be. A series of Conservative ministers and Prime Ministers gave a more expansive view of what constitutes the Conservative vision of the state, political-economy and their relation to society (which does exist and in which we live). As Roussinos writes, figures like Anthony Eden, Harold Macmillan, R.A. “Rab” Butler and others argued affirmatively for the use of the state to set the course for economic action, and against unbridled, brutal laissez-faire capitalism. A strong state was not, in their view, inimical to the Conservative tradition, and was in fact integral to insuring the social, political and economic conditions that enabled the good life for families and communities.

This attempt to chart a “middle way” between the Scylla and Charybdis of totalising socialism and atomising laissez-faire capitalism is one that sits well within the Conservative tradition, among whose political ancestors we can include the true One Nation philosophy that grew out of Benjamin Disraeli. His main effort was to reconcile and unite the “Two nations; between whom there is no intercourse and no sympathy; who are as ignorant of each other’s habits, thoughts, and feelings, as if they were dwellers in different zones, or inhabitants of different planets; who are formed by a different breeding, are fed by a different food, are ordered by different manners, and are not governed by the same laws . . . . THE RICH AND THE POOR.”

As I’ve written before, Disraeli rightly saw that what at the time was called “Manchester Liberalism,” of economic upheaval under the guise of prosperity and social turmoil presented as progress was inimical to social stability and the good life. Disraeli saw and put into words as no-one else could that “The great body of the people of this country are Conservative. I use the word in its purest and loftiest sense. I mean that the people of England, and especially the working classes of England, are proud of belonging to a great country, and wish to maintain its greatness.”

Rachel Wolf, in arguing that what is being offered now by the leadership candidates is the polar opposite of what won the party its 80-seat majority, echoes Disraeli when he declared that “The Tory party is only in its proper position when it represents popular principles. Then it is truly irresistible”. Disraeli saw rightly saw liberalism as a liquefier of social solidarity, “composed purely of wealth and toil, based on a spirit of rapacious covetousness.” As he wrote in his wonderfully scathing way, “Liberal opinions are the opinions of those who would be free from a certain dependence and duty which are deemed necessary for the general or popular welfare. Liberal opinions are very convenient opinions for the rich and powerful.” For Disraeli, the point of governing, and why Conservatism must actually govern through the state, was to “secure the social welfare of the PEOPLE.”

The Edwardian Bridge

Between Disraeli’s vision and that of Macmillan and his generation is a Conservatism of the early 20^th century that arguably links the two. Green traces the development of a British Conservatism inflected by the Idealist school of philosophy espoused by T.H. Green at Balliol. The Historical school of economists grew from this scene. The group “first came to prominence in Britain in the 1880s, and from that point on developed a sustained critique of Classical economics and what it saw as its vulgarized derivatives, Manchesterism [laissez-faire liberalism] and Socialism.” The Historical school was against free trade and for protection where needed, saw nations, unions, trusts and groups in general as more important for political-economy than the isolated, supposedly rational individual of Smith and Ricardo, and supported state intervention to create the conditions for economic prosperity through industrial productivity and thereby ease social discontent and prevent unrest.

Conservative figures like Alfred Milner, Leopold Amery, J.W. Hills, and Arthur Steel-Maitland also came from this milieu, influencing more in the party. All were in favour of using the state for social and economic reform for the common good. Through the minor figure Arthur Boutwood, E.H.H. Green argues that these Conservatives saw the individual as an ethical being whose aim was the realisation of his potential, with self-realisation the sum of life. [HG2] The role of the individual and nation were inseparable: individual self-realisation was only possible through society, as citizens of the nation into which we are born, and which provides our social, cultural, political and economic context. The potential of the individual citizen and the nation were seen as realised by each other. Citizenship was “freedom for duty,” and therefore commitment to the common good.

As Green writes, “Boutwood argued that true freedom could only come through co-operative acts that were born out of a recognition and realization of mutual needs and goals.” According to Green, Boutwood saw the relationship between the individual and the nation as one where the individual and nation had a duty to each other, and if the nation “’be not effectually and equitably serviceable, it should be made so’.” The state was to enable this, and “to achieve its ‘moral conception’ by … ‘work that sustains and fosters [the nation’s] life, that builds up its people into serviceable manhood’”, to create the conditions for individual, communal and national opportunity. In other words, to govern, and to reform where needed for the reciprocal common good. 

Boutwood was, again, a minor figure, but one whose writing encapsulated a view of society and political economy that galvanised many more significant men of the time, including eminent aristocratic party members and the Historical economists. The need for politicians and economists to lay the ground for individual and national prosperity and stability was best expressed by H.S. Fox when he wrote “’The State may become social reformer without becoming Socialist, but if the State does not become social reformer it will inevitably become Socialist’.” We face similar circumstances today, and it was because of this that the Historical school and more Conservatives than one would think were in favour of social reforms including pensions and workers rights and protections. As Green writes, ‘By 1914 [the Unionist Social Reform Committee] had proposed an extension of old-age pension rights, argued for minimum wages in certain trades, sponsored several schemes for working-class housing, and was close to presenting a blueprint for a national health service.”

The central aim of this kind of Conservatism, “was to provide the basis for a socially and politically integrative strategy that could overcome tensions and divisions within Britain.” To achieve this required cultivating national unity, “which in turn required acknowledging that the nation was … an organic entity. It was here that a positive role for the State was essential, in that the State was to ensure that no particular section of society was to be systematically undervalued or over-privileged. In practical terms this meant … social reform in the domestic sphere to alleviate the privations of the poorer classes, but carried through without recourse to class-divisive rhetoric or actions.”

Conclusion

There is a Conservative view of the state that runs through the true One Nation tradition descended from Disraeli, which underlay the worldview and policies of Edwardian Conservatism, Macmillan’s post-war Conservatism, and was buried by Thatcherism. We obviously can’t, nor should we, replicate exactly these kinds of Conservatism for today. But we must reignite the intellectual fire that galvanised Conservatism up to Thatcher’s time, and look again at the approach of the figures above towards the use of the state in service to our political, social, economic, and national life. The country is facing a range of problems that could very well prove disastrous or even catastrophic. These will not be solved or ameliorated by pursuing small-state dogma, but by the Conservatives learning to govern again. Whether that can be done remains to be seen.

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Few companies today are less popular than those in the oil and gas industry. Shell, ExxonMobil and British Petroleum are all resented for the great profits they are now making. 79% of the public back yet another windfall tax to get these profiteering companies to subsidise their bills. This is despite the fact the existing levy, with pre-existing taxation, is already an extortionate 65%, following Rishi Sunak’s increase to it in May. No doubt, with the forthcoming £130bn plus price cap,  further increases to the windfall tax will be touted as the means to pay for it. 

Increasing the windfall tax on oil and gas companies’ profits would be wrong: any windfall tax on these companies’ profits is wrong. Individuals, and the companies they constitute, have a right to the windfall gains of their labour or property, even if they haven’t done anything to earn them. To seize these gains is to violate their rights, to use them unjustifiably. Any such levy must therefore be abolished, and any increase in them opposed.

Let us proceed to bolster the truth of this liberal position by refuting the principal argument for the existing windfall tax, and by deduction all increases too.  We start with the contention that the profits of energy companies are ‘undeserved’. When Sunak increased the levy in May he argued it was fair because the companies’ increased profits have not come through “changes to risk-taking or innovation or efficiency”, but rather, have come as a “result of surging global commodity prices”. The essence of this argument is that individuals are not entitled to the income they have not had to do anything for. Although not Marx’s, Sunak’s reasoning shares with his the idea entitlements to incomes cannot be legitimised simply because they have arisen through free exchange. Some work needs to be done to confer deservedness.

It is then argued that the poor need support to get through the cost of living crisis, more than the companies’ shareholders need dividends, and this is a reason for the government to seize their profits via windfall taxation. Indeed it is predicted two-thirds of households could be in fuel poverty by January of 2023 (without further intervention). Together, the undeserved profits of oil and gas companies, and the needs of the poor, allow for a windfall tax for increased benefits to help the impoverished with their energy bills. 

The problem with this argument for the windfall tax is it proves far too much. Consider this example: across the country the average salary of a plumber is £35,862, putting such tradesmen’s earnings 14% above the median. Now imagine for some reason half of all plumbers quit the trade and decide to become waiters instead. The remaining plumbers would see their wages increase significantly, even though they’re doing the same hours and work as before. Let us assume our plumber ends up being paid a wage, such that his household expenditure is £45,437.60, putting him in the ninth decile of spenders. This allows his household to spend about £11,117.60 on restaurants, hotels, recreation and culture, as of 2019.

According to Sunak’s argument, the plumber should be subject to a windfall tax. Both criteria are satisfied. First, the plumber has done nothing to see his salary increase. Second, the poorest households, who really struggle to pay for their food and increasingly large fuel bills, clearly could do with the money more. Indeed, the poorest decile spends only about £1,705.60 a year on food and non-alcoholic drinks, less than a fifth of the plumbers’ spending on leisure, and that was in 2019! 

This is an unacceptable conclusion. Individuals have a right to the windfalls they derive from the voluntary exchange with customers and employers. To deny such a proposition is to accept whenever there is a shortage of labour in your trade or profession you are not entitled to bargain for a higher salary, or rather that the government is entitled to tax away all the additional income you may receive. Or at least it may tax it away insofar as others’ needs are greater than your own. I doubt my reader will want to embrace this. I believe this is because most of us implicitly reject the idea that individuals are only entitled to money they have worked for, or rather are only entitled to money insofar as it was proportionately worked for.

Consider the man who stumbles across truffles in his garden, he hasn’t worked for the money he receives on their sale; it’s sheer luck. Nonetheless, we accept he is entitled to their windfalls and should pay no more tax than anyone else with the same income. Equally, we accept people are entitled to the windfall on their car if it has become very popular, despite it being sheer luck such conditions have arisen. Indeed, it is sheer luck that beauty models are born beautiful. Yet no one is proposing taxing away their genetic-based windfall, with the bar being the income the average person would get going down the catwalk.  I contend that the root of these beliefs is a commitment to defending the freedom of the individual to make as much money as he so can, in whatever activity he so chooses – even if sheer luck is the cause.

By analogy then, if individuals, e.g. our plumber, are entitled to their incomes from sheer luck, then so too must the oil and gas companies be entitled to their profits from sheer luck too (from globally higher commodity prices). The alternative would be to live in a dystopian world where each job, trade, profession and commodity market has a differential tax rate to eliminate all windfalls (for why allow a part to be kept). To a few this may appear but a minor inconvenience. However, as F. A. Hayek has explained, this would lead to the impoverishment of society, as prices would be unable to direct resources to their most efficient uses. 

Consider, due to potato blight, the price of wheat increases dramatically as consumers switch to pasta. Today farmers of wheat would receive far larger profits as a result, due to the high price, despite having done no more work. This incentivises other farmers to shift to wheat production, from less urgently demanded crops, eventually pushing supply out, bringing the price of pasta back down. Resources are shifted from less valued to more valued uses and thus consumers are better off. If the state insisted, since wheat farmers are conducting no more work, efficiency-savings, investing or risk-taking, they should receive no higher price for their crop, the market would take far, far longer to adjust, and in the meantime, people would be worse off. Given these adjustments are always occurring across the economy, consumers would be permanently worse off if all windfall gains were taxed away.

Indeed it is even worse than this concerning the labour market. If half of the existing bin men decided to leave their jobs today the remaining bin men would see their wages go up, which would encourage new individuals into the role. If this wage weren’t allowed to go up though there would be shortages of bin men. To stop rubbish from going uncollected the state would have to conscript people into the position: These bin men would be slaves. Such is the conclusion one is forced to, as Hayek maintained, if rewards correspond not to the value which their services have for their fellows, but to the moral merit or desert the persons are deemed to have earned.

Clearly, if applied consistently, the principle no one should receive windfalls would impoverish the people, and require the conscription of individuals into many jobs. No man committed to living in a free society can thus permit the state to operate on such reasoning. Individuals have a right to their windfall gains, whether they be plumbers, or indeed the owners of oil and gas companies. The windfall tax must therefore be abolished, and failing that any attempts to increase it must be resisted every step of the way. Only then will the extraordinary profits of oil and gas companies remain where they should have always rightfully belonged: In the bank accounts of the shareholders.

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