How Britain fell out of love with the free market

Twelve years ago, shortly after winning his third consecutive general election, Tony Blair gave the Labour party a brief lecture on economics. “There is no mystery about what works,” he said, crisply, speaking from a podium printed with the slogan “Securing Britain’s Future” at the party conference in Brighton. “An open, liberal economy prepared constantly to change to remain competitive.”

Blair rounded on critics of modern capitalism: “I hear people say we have to stop and debate globalisation. You might as well debate whether autumn should follow summer. They’re not debating it in China and India.” He went on: “The temptation is … to think we protect a workforce by regulation, a company by government subsidy, an industry by tariffs. It doesn’t work today.” Britain should not “cling on to the European social model of the past”.

Most of his conference speech was vigorously applauded. But the passage on economics was received with solemn looks and silence. There was no heckling, as there had been when previous Labour leaders and chancellors delivered what they saw as home truths about the economy. Instead, there was a sense of resignation in the hall: an acceptance by a party of the left that the right had won the economic argument.

In the early years of the 21st century, the inevitability of an ever more competitive, deregulated, internationally orientated market economy, to which both government and society were subordinate – a doctrine often called neoliberalism – was accepted right across the mainstream of British politics: from the Thatcherites who still dominated the Conservative party; to the increasingly pro-business Liberal Democrats, who would soon form a coalition government with the Tories; to the Scottish National party, whose then leader Alex Salmond praised Ireland and Iceland for their low corporate taxes; to the Blair cabinet itself, where, I was told by a senior Labour figure in 2001, “You won’t find a single member with anything critical to say about capitalism.” It was assumed by the main parties that most voters felt the same way.