Lord Saatchi writes for Daily Mail and appears on BBC Newsnight

CPS Chairman Lord Saatchi appeared on BBC Newsnight on Monday 21 October 2013 to discuss energy bills and the future of capitalism. 

See Lord Saatchi’s appearance on BBC iPlayer (27 mins): http://www.bbc.co.uk/i/b03ffvjb/

This followed his powerful piece for the Daily Mail:

Soaring power bills… and why a slavish devotion to old capitalism by the Tories will hand Ed the keys to No10

I recently had the most extraordinary conversation with Ed Miliband.

There was I – the man who helped propel Margaret Thatcher to power in 1979 and a former chairman of the Conservative party – debating the merits of The Communist Manifesto with the leader of the Labour Party.

Asked what should be his priority as leader, I answered: ‘Read your father’s books.’

Apparently he has. He looks forward to startling the House of Commons as Sir William Harcourt did more than 100 years ago by announcing: ‘We are all socialists now.’

Many Conservatives rejoice at this news, that Labour is again about to sign ‘the longest suicide note in history’. Is that true?

It’s been 21 years since the Conservative Party won an Election. You hear it said that the party was unlucky to have a succession of five leaders with insufficient appeal to voters. That seems statistically unlikely. 

A more plausible explanation is that the party has lacked a marching tune people can respond to.

This might be because it has underestimated the power of socialism. Isaiah Berlin described socialism as ‘the greatest organised social movement of all time’.

But we went off socialism because it didn’t produce any money. The central Thatcher/Reagan critique of Marxist socialism was that it didn’t create wealth for its citizens.

So then we liked capitalism. But now we have gone off that too because it seems to produce too much worship of the golden calf. So now we don’t know what we like. That is probably why, on so many key political issues, when the public is asked which party has the best policies, the answer is often ‘neither’.

The fatal flaw of capitalism is said to be greed. But greed is part of the system – more politely known as rational self-interest.

The central mechanism by which capitalism is said to work is competition, best described by Professor Lionel Robbins: ‘Every day thousands of people cast their votes for the hundreds of products and services on offer, and from the competition to win their votes better and better products and services arise.’

That is said to be how the capitalist system brings the best outcome for all.

But that is not how things have worked out in recent years. On the contrary, there has been a dramatic widening of inequality. As Ed Miliband put it, the rising tide lifted only the yachts.

Some blame the ‘lone gunman’ – the rogue trader who wreaks havoc in the whole system. This Bad Apple Theory is popular with Conservatives because it is easier to blame one rotten apple than the whole barrel.

Another possibility, much less attractive, is that after all Marx was right: ‘The end result of competition is the end of competition.’

He described the outcome: ‘After years of internecine warfare amongst capitalists there would be fewer and fewer capitalists controlling vaster and vaster empires.

Who can doubt the accuracy of that prediction when considering the banks, the trains, electricity,gas, water, oil, or any other large global industry?

The unintended consequence of globalisation is the creation  of global cartels in which there is a huge imbalance of power between the individual customer and the giant corporation; a sense of powerlessness and unfairness that results from a world of global corporations whose governance (and maybe tax payments) are beyond the reach of national governments.

The overwhelming power of money in such a climate is a dangerous moment for Conservatism. What scares people most is soon money will talk in health as well as everything else.

As a New York investment banker explained to me: ‘Money means a better car, a bigger house and, in time, a longer life.’

People may conclude they need someone to protect them from that kind of ‘free market’, such as, perhaps, the state. This is why Labour thinks they have struck gold with a state price freeze on energy.

Conservatives like to say state socialism is a return to 1970s failure. But will that do? Perhaps not. Because one thing has changed radically since the 1970s, which is that the new economic superpower of the world is itself a socialist state.

China calls its own system ‘state capitalism, or capitalism with Chinese characteristics’.

The particular characteristic they have in mind is that the state owns 100 per cent of all large companies.

According to the text books, this is a road  to ruin, but the bosses of these Chinese companies (mostly good Harvard or Princeton men), are encouraged to compete with each other vigorously, just like American bosses. If they hit their profit targets, they stay. If they don’t, they get fired. 

According to research by the Russian Government, the Russian people can’t tell whether  the state owns 100 per cent or zero per cent of a company.

The Prime Minister and the Chancellor fully appreciate the intellectual challenge of this new world order, and will not stubbornly insist on the existing version of free-market capitalism as the only way forward.

That would open the door for Labour to access millions of people, especially young people, who do not accept the status quo. Studies show that many people are not sure what’s worse – big companies or big government.

For Conservatism, there is only one answer – to remind people of the connection between money and the most heartfelt Conservative value of all – freedom. As Professor J. K. Galbraith understood: ‘The greatest restriction on the liberty of the citizen is a complete absence of money.’

The Conservative Party does not need to shy away from its understanding of the importance of money in people’s lives. It  can be proud of its economics and what it can do for personal freedom, independence and individuality. To shy away from that is to try to row the Conservative boat with one oar.
Critics say Conservatism is ‘money-obsessed’, and has a heart of stone. But that is only because, as Mrs Thatcher wisely put it: ‘Caring that works costs cash.’

The Labour leader says the tide has lifted only the yachts, but Conservatives know that whatever kind of boat you have, the most important thing is that an individual can say: ‘I am the captain of my ship.’

Mrs Thatcher’s biographer, Charles Moore, paints a delightful picture of her sitting on the floor of her new think tank,  the Centre for Policy Studies, putting the plug on the office kettle. But as he explains: ‘She was not wiring a kettle. She was rewiring Conservatism.’ 

Let us hope the Prime Minister can use a screwdriver as well  as she did.

To view the article at the Mail Online, click here.

Date Added: Tuesday 22nd October 2013