‘As a culture we still have a problem with the idea that competition benefits the whole of society, not just the winners.’
Matthew Parris, writing in The Times on 16th March
Over a month ago, Matthew Parris wrote a comment article in The Times celebrating the 250th anniversary of Adam Smith’s ‘Wealth of Nations’. There are quite a few major anniversaries to celebrate at present: the 250th anniversary of the United States, which is the basis for King Charles’s visit later this month, and the 100th anniversary of the late Queen’s birthday.
The title for Matthew Parris’s article is ‘Time to open our eyes to Adam Smith’s insight’. He is celebrating Smith's recognition of the role of competition, although his article does accept that many people still find it hard to understand, particularly in areas such as politics and the courts — but also, as he says, in ‘the failure of socialist alternatives’.
His point is that competition leads to more efficient delivery — and he's right about that, in all the aspects he describes in his article. But there’s another perspective which is vitally important: that the provision of alternative options also allows for individual choice.
Individual choice underpins a sense of ownership for your decisions and, as we reflected at the end of last week’s commentary, it also leads directly to a sense of responsibility.
Socialism denies individual choice. Democratic socialism works on the basis that, after electors have endorsed a particular government in our 4-5 year cycle, they have ceded their power to make individual choices to central government in order to decide what's good for them (of course, autocratic socialism goes further in failing to provide even that periodic check).
As Matthew Parris says in his support for Adam Smith, this leads to an inefficient health service and an inefficient education system; in the same way that in commercial life innovation, invention and energy are emasculated by the lack of competition.
But it also leads to an atmosphere of serfdom similar to that in the Middle Ages, when landed nobility called all the shots and made all the choices.
In the United Kingdom, we have had to accept the socialist default of universal monopoly-supplied welfare for the past seventy-eight years. A grudging acceptance for the presence of ‘private health services’ and ‘private education’ has been accepted, although the latter is now being penalised hard by the imposition of VAT on school fees for the overt purpose of securing more funding for the monopoly state-supplied system.
However, the fact that it’s necessary to have private wealth in order to fund these alternative choices just confirms the unfairness of denying choice to the population at large.
We need a new commitment to individual freedom and disintermediation which can benefit everyone, including young people. As we have said, individual ownership is directly linked to people feeling a sense of responsibility and participation, but young adults are so heavily weighed down by debt and the ‘cycle of deprivation’ that it’s very hard for them to start on their journey towards that individual freedom and family formation.
Also, government has become far too large. Public debt has grown to an almost unsustainable level: particularly when bearing in mind unfunded state pensions and student loan debt. Of course, the pandemic has been partly responsible for this during the past decade, but the principal underlying reason is the automatic adoption of Attlee-style universality by all governments over the past seventy-eight years.
Our first action should therefore be to make a clean break from providing publicly-funded health and education services for all on a ‘free at the point of use’ basis. Those whose wealth/income is sufficient should be required to take out private health insurance policies, and the NHS should draw down their health provision costs from these policies as their services are used.
Meanwhile, those who are in a position to pay for their children’s/grandchildren's education, both at school and university, should be required to do so, whether in the state sector or private sector.
A properly-regulated voucher system would enabled all parents, including the most economically-disadvantaged, to have individual choice of schooling for their children; a similar system would provide alternative access to private health services, and regulation would ensure that medical records were uniformly available whatever service was used.
In short, politicians need to place far more emphasis on the ability for individuals to choose their own path in life, and not have it dictated to them.
None of this, however, promotes the polarisation of wealth: in contrast, individual freedom and disintermediation are the bedrock of egalitarian capitalism.
Matthew Paris needs to add this to his list of ideologies: concepts such as inter-generational rebalancing and participation for all through the receipt of ‘stock for data and creativity’ sit very comfortably alongside Adam Smith's endorsement of individual choice and competition. If only economists of his generation had also understood the need to address ‘The black hole of economics’: that is, acknowledgement of the role of the human life cycle to provide this rebalancing process.
However, there will be a good opportunity to explore these concepts in more depth at Share Alliance’s inter-generational rebalancing conference on 14th/15th May at the Institute for Fiscal Studies in London. In-person attendance is free of charge: please book now, at www.sharefound.org/conference .
Gavin Oldham OBE
Share Radio