conservatism - the econonomy knowledge flashcards

1. Ideological relationship with capitalism:

Whilst all conservatives support capitalism as the best means of generating wealth, strands differ. Traditional conservatism and one nation conservatism are cautious in their support - capitalism represents uncertainty and change, especially in the periods of rapid change seen at the heights of these ideologies ie. the industrial revolution. The economy is not the priority …

Tradition, a cautious approach to change and a strong approach to authority and order are keystones. So whilst capitalism is preferred, if it faulty, or pragmatically needs altering/abandoning, sobeit. However the new right neoliberalism strand sees things differently. Its absolute priority is the promotion of free market capitalism. This, it believes, offers not only maximum wealth, but maximum social freedom. The neoliberal new right consciously echo classical liberalism's stance. 

1. Keynesian economics:

The middle way between free market capitalism and a state controlled economy. It consists of a type of ‘planned capitalism’ where capitalism is controlled in a way to try to ensure social harmony and stability. The main source of social disharmony is …

identified as unemployment and subsequent poverty, so the government will try to create full employment.

Keynesian economics:

1. Government spends lots of money to …

2. employ more people in existing public services and by taking over other formerly privately owned key inudstries (nationalisation) that it considers vital to the national wellbeing eg. energy supplies, railways etc. and increasing their workforce.

3. this extra employment creates more wage earners. these wage earners buy more goods and services from private industries.

4. therefore private companies need to recruit more workers to fulfil the new extra demand for goods - boosting employment. ALSO… private companies win contracts on new public services or infrastructure initiatives created by government spending.

5. as such, the government now gains a greater income via more tax paid by the public. additionally, every new worker means one less person unemployed - therefore less welfare

6. in theory in the long term, despite spending big at the start … ultimately the government saves money from the fact it isn’t having to pay out employment and other welfare benefit payments.

7. social harmony is greatly boosted due to low unemployment and improved general prosperity.

1. Conservatism and the Economy:

The ideology can be split into 2 basic positions on the economy:

1. Traditionalists and paternalistic in character, and countenances at least qualified economic intervention
   

2. Liberal/Libertarian in character and firmly opposed to intervention. 

Both positions are constructed on the basis of the defences of private property, albeit advanced differently.

Property:(i):

For the Liberal perspective, property reflects merit: those who work hard and possess talent will/should acquire wealth. Property is ‘earned’. This view tends to attract conservatives who regard the ability to accumulate wealth as an important economic incentive. However, …

traditionals link property to a range of psychological and social advantages eg. it provides security. In an uncertain world, property ownership gives a sense of assurance, something to ‘fall back on’. Property, whether the ownership of a house or savings, provides a source of protection. It also promotes social values: those who possess and enjoy their own property are thus seen to be more likely to respect the property of others. Having a ‘stake in society’ creates an interest in maintaining/promoting law and order. Hence, property ownership portrays ‘conservative’ values of respect for law, authority and social order.

Property (ii):

Traditional conservatives use ideas in support of a paternalist approach to economic matters. In particular, they have challenged the liberal view of property by inciting that all rights entail obligations. Property is not an issue for the individual, but is important to society. For instance, in the social bonds cut across generations. Much property has been passed down generations - the present generation is the custodian of the wealth of the nation and has a duty to preserve and protect it for further generations. UK Tory MP Harold Macmillan expressed this during his opposition to …

Thatcher’s government policy of privatisation, describing it as ‘selling off the family silver’. Social obligations don’t only bind generations, but suggest that the wealthy have a duty to attend to the interests of the less well-off, justifying social welfare.

Property (iii):

Liberal or Libertarian thinking of the New Right on the economy, differing from paternalist economic thinking in at least three ways:

1. Property rights are taken to be absolute in the sense they are unconstrained by obligations/wider social responsibilities. Having earned their wealth people have an unchecked right to use it how they wish. This is incompatible with any welfare or redistribution system.

2. Whilst traditionalist or paternalist economic thinking is largely shaped by pragmatic considerations, liberal/libertarian thinking is affirmatively rationalist, being grounded in the theories of market economics. 

3. Rather than accepting the notion of a balance between the economy and the state, they insist only an unregulated capitalist economy can deliver efficiency and generate prosperity.

Capitalism (i):

Given their support for a society defending private property and inequality, it is unsurprising that conservatives back a capitalist economy. However, they disagree over the type of capitalism they prefer: Traditional conservatives generally support capitalism and private enterprise -  largely as they can provide a level of material prosperity, which then cements society. Traditional conservatives also acknowledge that laissez-faire capitalism can damage and destabilise society by exacerbating inequality. This connects to their view of human nature. Anthony Quinton -

“behind the forces of the market lie the forces of human imperfection”. Many traditional conservatives would reluctantly agree with Karl Marx that ‘raw’ capitalism is the enemy of continuity and conservation. Unchecked capitalism is an iconoclastic economic system and therefore was troubling to many orthodox conservatives.

Capitalism (ii):

Michael Oakeshott complained that the historic charms of rural areas and village communities were frequently threatened by the ‘remorseless rhythms’ of market forces, an argument recently updated by those seeking to protect England's green-belt from property developers.  Traditional conservatives tend to endorse a more …

 regulated or moderated form of capitalism, similar to that associated with John Maynard Keynes. According to Harold Macmillan, the best economy is one representing a compromise between free-market capitalism and socialist state ownership - a ‘middle way’. The resulting ‘mixed economy’ would supposedly preserve capitalism, while sustaining full employment and rising levels of public spending on public services - both of which were thought vital to the maintenance of a one nation society.

Capitalism (iii):

Influenced by neoliberal philosophers such as Friedrich von Hayek, New right conservatives like Robert Nozick generally have a more sympathetic view of market forces and free-market economies. Indeed, during the 1980s, free market capitalism was widely dubbed ‘Thatcherism’ or ‘Reaganomics’ on account of policies pursued by Ronald Reagan and Margaret Thatcher. As a result …

new right economics is strongly linked to the privatisation of state-owned industries, the deregulation of state-owned utilities and a more enthusiastic view of capitalism generally. New right conservatives usually justify such measures as practical responses to difficult economic circumstances - particularly the recession of the late C20th, which they saw as an indictment of Keynesian and ‘mixed’ economies. But free markets have also been defended on wider philosophical grounds, with Nozick citing them as allies of individual freedom and a brake on state power

Capitalism (iv):

To those who suggested that New Right economics were ‘unconservative’, Thatcherites and Reaganites usually offered two responses:

1. It was recalled that Edmund Burke, as an admirer of Adam Smith, was a firm defender of free trade and a laissez-faire approach to the economy.

2. The new right argued if the state withdrew from the economic arena, the state would be much better equipped for its true conservative purpose. 

Free market capitalism: A system that minimises government intervention and maximises the role of the free market.  According to the theory of the free market …

rational economic actors acting in their own self-interest deal with the creation &  pricing of goods and services in the most efficient manner. Government regulations, trade barriers, and labour laws are generally thought to distort the market - and should be removed whenever possible.

positives of Free market capitalism:

• Reinforces the importance of private property and therefore established social order and values?

• Has developed organically in the UK since 1979, so is it fit for purpose as it has stood the test of time?

• Belief in life / society / individuals as being naturally competitive

• Some like it because it supposedly maximises individual economic freedom and therefore social freedom.

  
  

negatives of Free Market Capitalism:

• Promotes risk and innovation that can lead to change and social upheaval eg. in old industries closing, new types of working practice (Zero hour contacts?)

• Thatcherism in the 1980s led to radical economic change - leading to social dislocation (‘benefits of heroine’) especially in former industrial heartlands.

  
  

  
  

• Can sharpen the gap between rich and poor, deepening economic inequalities

• Conservatives have a negative view of human nature which could be applied to ‘the market’. Why should it self regulate? Eg. failure of liberal idea that no monopolies exist in capitalism/free markets.

  
  

  
  

Moderated capitalism: This aims to reduce the destructive forces of capitalism while keeping its strengths.It involves a greater level of government intervention in the free market - including raising enough taxes to fund decent public services and welfare systems. Workers rights will be …

protected by legislation. International trade may be restricted by tariffs etc to protect national producers and workers from foreign competition.

positives of Moderated Capitalism:

• Ensures against big booms and busts of the market and therefore the social upheaval and upset economic busts cause

  
  

• Protects national producers from the threat of globalised competition - consistent with the idea of national identity / sovereignty. Eg. formed the south american economic model 1950s-70s

• Reinforces the importance of private property and established social order.

  
  

  
  

negatives of Moderated capitalism:

• Some conservatives believe any intervention in the free market will damage it - to be effective must be unregulated.  

  
  

• Similarly, they’d argue, international trade also needs to be unrestricted. This way every nation can develop its own ‘competitive advantage’ and if every nation does this being able to produce a particular good or service at the best price, the whole world will get richer as the price of goods fall. 

  
  

Keynesianism - Keynesian capitalism is a type of ‘planned capitalism’ that aims to create full employment.  The government does this by collecting in higher rates of taxation and by borrowing money, and spending this in order to stimulate economic activity. There is an emphasis on job creation to take people out of welfare, and instead employ them in public services instead. Government spending is also used to stimulate job creation in private business - e.g. in the 2020s UK gov spending £85bn on HS2.

As more people are employed in public services and national projects, this creates a double bonus.  First they spend their new wages on goods and services - stimulating more job production.  Second they start paying tax, and no longer need welfare, meaning the government can recoup the earlier big spending done on job creation in the first place. Key industries - like energy, transport and telecommunications - are nationalised (i.e. taken into state ownership) - to ensure they are run for ‘the public good’.

benefits of Keynesianism:

• Promotes social harmony - government can mitigate against the worst extremes of the free market and ensure social harmony 

• Reduces/ ends welfarism, since full employment reduces the need for benefits. 

  
  

  
  

• Promotes ‘corporatism’ - all elements of society cooperating in governing ie. business leaders, trade unions etc. integrates more groups into the decision making process. 

• Used by Sunak as Chancellor 2020-21 - 11.7m workers ‘furloughed’ so 80%  of their wages paid by the government during COVID - at a cost of £70bn (keynesian economics … but for pragmatic reasons)

  
  
  

negatives of Keynesianism -

• The free market is badly distorted by government intervention.

• Leads to inefficient public services with monopolies - drain on the taxpayer and treasury. 

  
  

  
  

• Whilst ‘welfarism’ reduces poverty and therefore economic inequality, then the ‘public choice theory’ points to extreme inefficient state monopolies run for the good of workers not consumers - so you’re just exchanging one economic drain with another 

• Unions gain too much power. 

  
  

  
  

To what extent do conservatives disagree on the economy? Free market capitalism is the ideal economic system:

All strands fundamentally support capitalism as the ‘organically’ developed and empirically demonstrated most effective economic system. 

Traditional Conservatism has a more complex relationship, most thinkers e.g. Burke favouring capitalism.  However other Traditional Conservatism e.g. modern Iran would oppose capitalism as not in line with ‘traditional social values’ of that state. 

To what extent do conservatives disagree on the economy? Private Property as key:

Private property provides psychological security for the individual, and gives them a ‘stake in society’. It also reduces individuals’ dependency on the state, which  especially appeals to Traditional Conservatives and Neoliberals. However …

strands disagree on the extent.  The best example would be Neoliberalism's promotion of ‘private property’ by selling off state owned industries to individuals in the form of share-ownership, and by selling off 1m+ council houses. This is in direct contrast to One Nation Conservatism, which supported state ownership of key industries & social housing

To what extent do conservatives disagree on the economy? The state should play some role:

All strands see the state playing some role in the economy - although the stands vary enormously on this. Even Neoliberals …

would agree there should be at least some role for the state - to enforce contracts, support low inflation, and potentially support ‘supply side’ features of the economy,for example by  ensuring there is a well trained workforce

To what extent do conservatives disagree on the economy? Opposition of generous state provided welfare:

All strands would see state provided welfare as undesirable because it is both an economic drain and also bad for the individual who relies on it, damaging their self-esteem and happiness. However …

whilst all would consider it undesirable, for Trad Cons, ONC and Neoconservatives, they are happy to concede it is necessary for social stability.  Even Neoliberals like Nozick concede it has a place, although they want it lowered to an irreducible minimum, and instead a reliance on private charity.  (Although Rand arguably saw no place for state provided welfare)

To what extent do conservatives disagree on the economy? Manipulation of the economy for the higher goal of state and societal stability:

For Traditional Conservatism, One Nation Conservatives and Neoconservatives, the economy is a tool of the state to ensure the stability of society - so whilst capitalism is the ideal system, it can be manipulated or overridden if necessary for the good of society .

For Neoliberals the free market is sacrosanct & untouchable - it gives the individual the opportunity to thrive and be economically ‘free’ - and socially for Neoliberals, atomised individualism matters more than whatever quite ‘society’ is .

To what extent do conservatives disagree on the economy? The level of state role in the economy:

One Nation Conservatives are willing to favour state intervention in the economy via Keynesianism, to support social and economic goals that come from low unemployment and quality public services. Neoconservatives and Traditional Conservatives would favour a limited role for the state in the economy - but accept it is needed to …

stabilise the extremes of boom and bust that can be seen in capitalism.Neoliberals would reject these ideas.  They see state intervention as corrupting the way the free market operates.  This makes everyone poorer, and reduces individual freedom.

To what extent do conservatives disagree on the economy? The state’s role in Tax and Spend (fiscal policy):

One Nation Conservatism’s interventionist economics requires a higher degree of government taxation and spending. Traditional Conservatives & Neoconservatives would prefer lower taxation, and the state playing a reduced role.  Nevertheless tax is needed for the state to fund its activities. 

Neoliberals would want taxation reduced to its lowest possible level - and radicals such as Nozick would ultimately want it abolished since it represents ‘legalised theft’.

To what extent do conservatives disagree on the economy? The level of the states role in welfare provision:

Neoliberals wish to fundamentally ‘roll back the state’ to pre-WWII days - where the individual is more responsible for their own economic circumstances, and only the most minimal welfare safety net is provided. All other areas of conservatism disagree and believe that the organic state has evolved to meet the needs of modern society - and this includes the acceptance of the need for welfare.  They reject the Neoliberal position that an ‘overmighty’ state was created by the ‘error of socialism’ post WWII. One Nation Conservatives would be …

the strand with the most generous provider of welfare. Neoconservatives would share some Neoliberal views - opposing the growth of the ‘nanny state’ and ‘cradle to grave’ welfarism - which weakens individual responsibility and initiative, and breeds dependency culture.  Nevertheless they would accept the need for some state role in welfare to prevent social disorder and unhappiness. Traditional Conservatives would most likely support this ‘middle’ position too.