Remember Philip Hammond desperately trying to balance the books as Chancellor? Now all the talk is of how foolish Osborne was to batten down for so long. And it looks as if Hammond wasted his time. Expansion and big rescue packages and capital spending are the order of the day. In the USA, the same. Biden’s $1.9 trillion rescue package. And big plans for infrastructure. The debate in the USA is whether it will cause inflation to get out of hand. The Economist is putting out dire warnings on the one hand – but supporting a big spending approach for the EU on the other.
How government interacts with the private sector will be more than ever in the spotlight. The lobbying scandal involving David Cameron and Greensill Capital is just one example of how this relationship can go wrong.
Adam Smith provides context. He tends to be associated, by way of a selective reading of The Wealth of Nations, with a freewheeling free-market philosophy. By which bad behaviours might be somehow balanced out by good. Not so, as his ‘The Theory of Moral Sentiments’ reveals. ‘It carries within it a crucial Smithean insight, that innumerable human interactions can yield vast but entirely unintended collective consequences – social benefits, yes, but also social evils…’ (Jesse Norman, ‘Adam Smith, What He Thought And Why It Matters’)
There is a good, and ‘Smithean’, argument to be made as follows. In a commercial society we are all merchants. The pursuit of wealth is of itself a good thing (depending on how ‘wealth’ is defined). The desire for human betterment drives that process. War and violence have, for all of history, brought about division. Commerce binds us together.
But over-accumulation, growth for its own sake, inequality, the pursuit of self-interest, the handing-on of wealth from one generation to the next – wealth for its own sake and not as the driver of a society’s welfare – they are among the great enemies. The fact that David Cameron’s activities were ‘legal’ exemplifies, all the more, how easily the pursuit of wealth as an ultimate social good can be corrupted.
Jesse Norman, who is incidentally an Old Etonian, and Tory MP (read into that what you may), has an intriguing paragraph in his biography of Adam Smith: ‘Yet as technology spreads big data, insider knowledge, digital technologies, there are increasing dangers of a new tech-enabled crony capitalism: a self-reinforcing cycle in which greater insider power encourages the development of bent markets; these in turn create popular demands for more government regulation, create more complexity and opportunity for lobbying, a further boost to the power of insiders, and so on.’
‘What me, guv?’ I can imagine Cameron as saying. The game is so entrenched. We’re, many of us, wary believers in market capitalism, where market forces ‘drive prices down and quality up, and consumers have a very wide choice’, in Norman’s words. We’re talking of food, clothes, everyday items.
Financial engineering and derivatives are another story. Begetters of boom and bust, and multiple shenanigans. (They were of course unknown to Adam Smith.) Greensill Capital, advocacy for which got Cameron into trouble, was a clever financial idea (I wondered about the term ‘ruse’) where business bills are settled immediately for a fee, assisting thereby with the issue of late payments.
Now, as much if not more than ever, with big money and big contracts in play, we have a whole new raft of opportunities for crony capitalism, re-working old business and school networks, rent-seeking, inside knowledge, and conflicts of interest. More than ever we need to be wary – to be aware.
Heading off at a slight tangent there’s a paragraph from an American author*, writing on the subject of meritocracy, I’d like to quote: ‘Someone who wants an elite income … must do one of a narrowly constricted category of jobs, heavily concentrated in finance, management, law and medicine.’ Teaching, public service, ‘even engineering’ don’t get a look in. (How medicine and money came to be quite so conflated is a uniquely American story.)
Cameron, a humble politician earning a relative pittance, wanted to be part of that big-earning brigade, with big stock options on offer.
Many had a high regard for Cameron. He will be wondering how he surrendered it so easily.
And finally …I’m intrigued to see how the Daily Mail is trying to turn the lobbying scandal into a plot by Labour anti-Brexit insiders within the Civil Service trying to blacken the government. It goes with Palace ‘insiders’ telling us what really went at the funeral between Harry and Kate and Will.
Don’t believe a word of it.
*Daniel Markovits, ‘The Meritocracy Trap’, quoted by Stefan Collini in the London Review of Books)