Monday 9 February 2009

How to Make Pale Pink Toryism Red

Just how 'red' is 'Red Toryism'?

Reading over Phillip Blond's essays, in particular that in Prospect, I can see definite similarities and overlap with the kind of project which Paul Hirst advocated, from the left, in the 1990s and early 2000s: he called it 'associative democracy'. The core elements are similar: (1) an emphasis on political and economic decentralization; (2) an analysis of the central state as a failed welfare provider; (3) a call for more democratic or mutualistic forms of productive enterprise (e.g., co-ops); and, not least (4) a commitment to empowering individuals in the market through a wider distribution of assets (and, in Paul Hirst's case, through an unconditional basic income).

Stated abstractly, there is a lot here that I am sympathetic to (though, in both Phillip Blond's and Paul Hirst's cases, the critique of the state as welfare provider is overstated).

So, in the abstract, 'Red Toryism' does fit with a certain tradition of (to my mind) attractive left thinking. But what about when we get concrete? Its here that 'Red Toryism' most clearly falls down.

Take the proposal to foster a wider distribution of wealth - to 'recapitalize the poor'. (As one of my colleagues pointed out: 'I didn't know they had been capitalised in the first place.') On this crucial plank of the Red Tory platform, Phillip Blond writes as follows:

'Recent Tory proposals to exempt the savings of the low paid and pensioners from tax are exactly the path to follow. They should go further, arguing for far-reaching extensions to employee share ownership, workers' buyouts and the promotion of equity guilds and asset co-operatives.'

The only concrete policy proposal here is an endorsement of the Conservatives' recently announced proposal of tax relief for savers. However, as I pointed out in an earlier post, tax relief has a long history and a proven record of failing to encourage asset-building amongst the most asset poor. The proposed policy isn't up to the job; there is a huge mismatch between the abstract principle and the concrete policy.

Labour, by contrast, has understood the limitations of tax relief and, after two careful and successful pilot programmes, is now set to roll out a national scheme which will provide matched savings for low-income households (the Saving Gateway). And, of course, it has introduced the Child Trust Fund (CTF), the first public policy to express - albeit in a very modest way - the principle of a citizen's inheritance: that all citizens should have capital in early adulthood as a right of citizenship. So one way of giving more plausible policy content to 'Red Toryism' would be to think about how Conservatives might take these policies further, rather than retreating to tax relief.

But why stop there? Phillip Blond himself indicates that he thinks Toryism should go further, advocating 'far-reaching extensions to employee share ownership, workers' buy-outs, and the promotion of equity guilds and asset cooperatives.' I am not sure what all this means. But there is no lack of radical ideas for promoting universal ownership to which one might look. These ideas have informed political discussion, at the margins, in the past. With 'capitalism-as-we-know-it' under more critical scrutiny today than for many years, the time may be ripe for bringing some of these ideas into the mainstream. (For those interested, I discuss the history behind some of these ideas in my chapter in this book.)

Here are three ideas:

(1) 'Pancapitalism'. One idea which the Liberal party considered in the 1960s (only to reject) is that of 'pancapitalism'. The idea originated with a French academic, Marcel Loichot. Loichot argued that capital-holders in French firms should be limited to a norm of a 5% return on their investment. Any return above this should be divided between capital-holders and workers. Workers' share of this 'pure profit', he argued, should be invested in shares. In time, workers' collective shareholdings would grow. If the scheme were maintained long enough - around 25 years, he argued - the French working-class would become majority shareholders in French industry.

(2) Citizen's Unit Trust. Another idea from the Liberal milieu is that of creating a Citizen's Unit Trust. The originator of the idea, James Meade, proposed that all firms be required to issue new shares each year to a public fund, e.g., to issue 1.5 new shares each year for every 100 existing shares ('capital dilution'). The shares would be held in the public fund and every citizen of the UK would receive an annual dividend payment from the fund. Over time, the fund would grow in size, and so, too, would the dividend. In essence, the idea is similar to pancapitalism, except that the capital fund is fully public rather than confined to those in employment. A proposal of this kind was actually the policy of the Social Democratic Party in 1986/87, and was endorsed by Paddy Ashdown, as leader of the Liberal Democrats, in his 1989 book, Citizen's Britain. Robin Blackburn's recent proposals for new 'social funds' to be established by capital dilution are a variant of the same idea.

(3) Socialize inheritance. We are used to thinking of inheritance as a private, familial institution: wealth passes down the generations through the family. But we know that this institution leads to: inequality in inheritances; people not getting an inheritance when they most need wealth, e.g., at the beginning of adulthood when key life-shaping decisions are made; and potential vulnerability to manipulative threats of disinheritance. All these problems can be reduced if we partially socialize inheritance. Imagine, for example, that the state - yes, the central state - takes 25% of all the wealth passed across the generations at death. (Under the existing inheritance tax, even before Labour raised the thresholds in 2007, the state took only about 7 or 8%.) Imagine that the state then uses this fund to pay every citizen a capital endowment on maturity (or at birth). In their 2000 Fabian Society pamphlet, A Capital Idea, Julian Le Grand and David Nissan calculated that such a tax could finance the payment of a £10,000 grant to each 18 year-old.

Now if the 'Red Tories' were to explore some of these ideas, perhaps we would indeed have something worthy of the name.

As things stand, however, when it comes down to concrete policy, 'Red Toryism' has yet to get beyond a pale shade of pink.


Dane Clouston said...

I have just looked up on Google;

"Redistribution of inherited wealth" 183 entries

"Redistribution of wealth" 429,000 entries

"Redistribution of inheritance" 7 entries, of which 2 relate to Universal Inheritance.

"Redistribution of gifted and inherited wealth" 2 entries - both relating to Universal Inheritance.

The only time at which it is practical to redistribute wealth is at the point of transfer from each generation to the next. So why the blind spot/taboo? How can it be overcome?


We will have to target the under 25s, and maybe make more of tapering British Universal Inheritance down from £10,000 at 25 to £2,000 at 29 - to be financed by a sufficiently high progressive rates of the Unearned Capital Receipts Tax.

Dane Clouston said...

I now think that it is more practical to start tapering in a different way.

Introduce British Universal Inheritance for 25 year olds at £2,000 in the year of introduction, then £4,000 for those becoming 25 in the next year and so on up to £10,000 for those becoming 25 in the fifth year and thereafter.

No one year group will miss out more than £2,000 vis a vis the next.

This is a long term policy proposal which will bring about a new form of popular capitalism in each new generation to replace unfettered dynastic capitalism.

Those over 25 will not benefit directly, but their children and grandchildren will do so.