Are Capitalism and Conservatism now openly at war with each other?


by Carl Packman    
10:45 am - July 3rd 2012

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For Harry Wallop the resignation of Marcus Agius – widely seen as the fall guy for Bob Diamond – is the final nail in the coffin for so-called “Gentlemanly Capitalism”.

After all, Agius had made his reputation before the Big Bang of the financial system and, according to Wallop, “had a reputation for ­being charming, impeccably dressed and lacking stuffiness.”

This is typical Telegraph stuff, with a general distaste of the new-moneyed kids in the financial sector, undermining traditional social hierarchies, practices and institutions.

His background is blue-chip and formal. His father was chairman of Schroders, while his cousin, Nicholas, was a senior figure at SG Warburg. His wife, Kate, is the daughter of Edmund de Rothschild, of the great European banking house.

This is why it’s called Gentlemanly capitalism, I gather. But the wider implications are what it does to Conservatism. Wallop explicitly blames the Big Bang for the fall of the likes of Agius. His ilk has seen a decline ever since the City was opened up to Wall Street 25 years ago.

Inherent to this particular view is a traditional, albeit rarely seen anymore, conservative protectionist opposition to certain types of capitalism. It was the fault of Wall Street, that’s where the blame is.

It’s all rather reminiscent of what the Telegraph’s Peter Oborne wrote after the riots:

that one needed to condemn not only the feral youth of Tottenham, but also the “feral rich of Chelsea and Kensington”, their noses stuck in “the repellent Financial Times magazine How to Spend It”, who had played their own part in “the moral disintegration in the highest ranks of modern British society”.

Splits are commonplace on the left; the left is good at them. But the right are going through something of a split themselves at the moment.

The Libor scandal shows that there have been a number of examples in the city of control and manipulation of what free market purists would once have called the invisible hand.

But some conservatives knew this all the time. Those like Harry Wallop are distrustful of what has come out of the big bang, under Thatcher’s watch, because it undermines traditional power divides.

These views will no doubt take root soon enough – but what will it mean for capitalism and conservatism today? Will it make their relationship ever-more awkward?

—-
A longer version is here

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About the author
Carl is a regular contributor. He is a policy and research analyst and he blogs at Though Cowards Flinch.
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Reader comments


Don’t be silly. The tory part exists to represent the idle rich.

I smell a sleazy deal. Govt announces weak parliamentary inquiry. Next day Barclay’s managers start resigning. The fix is in. In exchange for not having a full public inquiry , Diamond and his mates have fallen on their bonuses.

But remember kids, steal a bottle of water, and you will get 9 months in jail. The Lie Dems must be so proud to be propping up this bunch.

1. Sally.

You seem to be confident that a law has been broken here. Could you tell me which one it is as I am unsure? The FSA isn’t handing dossiers over to the police.

I wouldn’t disagree that manipulating interest rates should be a crime, but it would have to be carefully worded to exclude the staff at the Bank of England, whose job is to do exactly that.

3. Third rate Les

Why on Earth, do you conisder it legal to have been fixing the LIBOR?

It’s illegal under several aspects of the law that have been highlighted on several other blogs. The only people who are spinning the ‘yes, but is it actually illegal?’ line are the people invloved and a few smart-arse interneteers trying to look clever. It’s even illegal to fix a football or cricket match for pecuniary advantage, never mind the LIBOR rate. It’s illegal this way, that way and every way you look at it. Unfortunately, it seems to have run right to the heart of the Bank of England and the government, so don’t expect to see much action. Unless we settle for nothing less, of course…

4. White Trash

Is Wallop a scion of the Fellowes / Wallops?

This fault line betwen old money High Tories (real conservatives) and the neo-Liberal right-wing revolutionaries (who, like Margaret Thatcher, are not conservative at all) has been going since Peel, Bright and the Manchester Free Traders ditched protectionism and the Corn Laws and turned the Tories of the 18th century into the (so-called) Conservative Party of the late 19th and 20th centuries.

Nice to see it being brought into sharp and painful relief now though.

Rather like the logically unbridgeable gulf between the Libertarians and the Authoritarians in the party, the one that they hastily try to brush away every time the issues of drugs, sex, family and abortion raise their heads.

Same hymn sheet my backside.

2 Always amused to see tory trolls defending their corporate maters.

6. Bitter & Twisted

@ 2.

I think the common law offence of fraud should cover it.

I kind of agree with Sally here – only I don’t think she’s going far enough, touchy feely liberal that she is. I’d add that the Labour Party also exists to represent the idle rich, only they are more subtle about it.

We’ll be seeing more of the Capitalists versus Gentlemen meme trotted out over the weeks to follow, along with tales of how when gentlemen ran the city your word was your bond and all that guff. Tales of how the old boy network kept everything working properly. What they won’t point out though is that the old boy network was about making sure everyone got wealthy from insider dealing – which of course wasn’t illegal until 1980.

7. White Trash

6 B&T
When you say “everyone” you mean everyone who has the right school tie, yes? As opposed to everyone else who only gets trickled down onto.

8. Bitter & Twisted

@ 7 White Trash.

Of course, I was only referring to decent people, not plebean scum.

When you say “gets trickled down onto” I take it you mean urine rather than money?

9. Trooper Thompson

There’s the seed of an interesting discussion here, but I fear it will not break through the layer of ‘fertiliser’ dumped on top of it.

@ 6

“tales of how when gentlemen ran the city your word was your bond and all that guff”

It’s not guff, although it’s long ago now. How do you think London became the financial centre of world trade, if not by being the most trusted place to do business?

@ 4

“Peel, Bright and the Manchester Free Traders ditched protectionism and the Corn Laws and turned the Tories of the 18th century into the (so-called) Conservative Party of the late 19th and 20th centuries.”

I think you’re missing a rather large chunk of the story. Bright and the Free Traders were not Tories nor Conservatives but rather the complete opposite, i.e. Radical Liberals. It should be noted that political parties were not so formal then as now.

10. Bitter & Twisted

@ 9 TT.

It’s not guff, although it’s long ago now. How do you think London became the financial centre of world trade, if not by being the most trusted place to do business?

It’s not guff eh? Riiiight. That’s why they didn’t need insider trading laws I take it… because everyone was too honourable… I call bullshit! The fact is that the city was up to its neck in financial shenanigans – which is why the regulations were finally brought in – though this was in truth years too late. If you think otherwise, a friend of mine has a bridge that you might be interested in.

I would suggest that the reason London became the premier place to do business might have had something to do with it being the hub of the British Empire, and later as the Empire started to be dismantled, being a place that had extraordinary close links with a series of offshore tax havens dotted about the world. Due to the peculiar constitutional nature of the city and its very close links with government and the Crown, and the fact that these tax havens also have very special links with the Crown, a whole lot of sneakiness can be played that can’t be played from say New York.

The tories have alway represented the economic elite and have, up to the present, been able to succesfully assimilate contradictory ideologies, first the protectionist Corn Laws to pander to the landed classes and then they embraced liberalism as the countryside elite fell to the industrial class and markets as @4 has outlined. The old money, new money divide had its roots in this period, as the new economic elite bought bankrupt country estates and their sons and daughters courted the children of the titled.

Conservativism will accept any model of economic production but will always support the the economic elite, as it happens, capitalism is the global mode of production hence tories support the large corporations and multi-nationals, who are currently the economic ellite.

As for the old boy’s league, this exists because the children of the economic elite tend to gather together in places which are usually reserved for said elite, Eton is one example, so it’s class and geography that unites conservatives not capitalsim.

12. White Trash

9 TT
I’m not missing it out, it’s just that there’s not room for decades of history involving thousands if not millions of people and their interwoven activities on a tiddly little LibCon comment box -

” Bright and the Free Traders were not Tories nor Conservatives but rather the complete opposite, i.e. Radical Liberals. It should be noted that political parties were not so formal then as now.”

Quite.

As you say, the seed of an interesting discussion – one that so-called “Conservatives” today like John Redwood always seem to want to avoid, unsurprisingly.

Here’s a little bit more:

“The industrial revolution, which had exacerbated the problem, also provided a way of solving it by bringing into being a new middle class that included men such as Peel, Cobden and Bright, whose interest was with industry rather than land. The industrial/commercial class resented the landed political power monopoly; they also wanted cheaper bread, and to reduce their wages bill. Corn Law agitation became a moral issue, and therefore attracted support. Following the trade collapse of 1836, attention was turned to free trade. If the Corn Laws and the remaining tariffs could be removed, there would be an endlessly expanding market for goods.”

http://www.historyhome.co.uk/peel/cornlaws/acll.htm

As Disraeli had it Peel, at that time Tory leader, caught the Whigs bathing and walked away with their clothes. Peel thus sold the Tories down the river and shattered the party, but he is now portrayed thus by party descendants:

“Sir Robert Peel became one of the Party’s most decisive agents for change after taking over the leadership in 1834. He reinterpreted key elements of the Tory tradition to create the modern Conservative Party, and led a reforming government whose commitment to free trade resulted in import duties being swept away”

http://www.conservatives.com/people/the_history_of_the_conservatives.aspx

And of course the Conservatives have equivocated between conservatism / protectionism and its diametric opposite of liberalism /”free” trade ever since, as it suited the balance of power at the time, and they are still completely riven and full of internal contradictions today, as the OP points out.

As you say, plenty more out there for those who want to see.

13. Richard W

I think there is a lot of truth in this article. Moreover, it goes to the heart of why traditional Tories hate the Cameroons. Although I don’t like the left right political spectrum for the sake of convention and clarity I will use left and right. The dominant force in the contemporary Conservative Party are not Tories at all. What best describes them is rightwing liberals. That does not mean there are no Tories aligned with the Conservative Party, but they are not the dominant force.

The rose-tinted nostalgia for ‘ my word is my bond ‘ days tends to ignore the reality of what happened in the City during most of its history. Regulations did not build up through politicians asserting authority. Restrictions were more often than not a response to the regular financial scandals that occurred in the City. Contemporary scandals are pretty mild compared to what happened during the 18th and 19th centuries, and there is virtually nothing that one can do that has not got a historical precedent. During 2008 an Irish bank was lending people money to buy its shares to boost them. The South Sea Company were doing that in 1720.

The central problem in financial scandals nearly always comes down to asymmetric information. One person knows more than the other in the transaction and they exploit that advantage. Baron Charles de Berenger buying up huge quantities of government bonds and distributing leaflets throughout the City saying that Napoleon was dead and French defeated. The price of government bonds soared and he sold at an inflated price. The only problem was the battle of Waterloo was the following year. Nonviable railway stock and often entirely fictitious companies was a regular feature of the 19th century City. Investors did know what they were buying and that disadvantage is where the term ‘ guinea pig ‘ comes from. Well known personalities especially MPs were paid guineas to be a part of the firm to give investors confidence that the firm was legitimate. The assumption that the MPs were not being taken for a ride was a big assumption and they too were often exploited.

So the rise of regulations and restrictions in the City was specifically to protect ordinary investors. Moreover, these restrictions occurred in parallel with the Victorian moralisers being terrified of the plebs thinking revolutionary thoughts. Therefore, the thinking was that those with capital to speculate should set an example to the plebs and scum to stop them getting ideas above their station. From this confluence of forces the honourable City of ‘ my word is my bond ‘ was born.

It is no surprise that real Tories do not like contemporary finance. Those who were born to rule over us are no longer the dominant force in finance. Moreover, they were the dominant force within the lifetimes of those complaining about the ‘ new-moneyed kids ‘ Mrs Thatcher did more than any other to bring about their demise.

14. margin4error

For those pondering whether it is illegal – it is. Fraud is a crime. It is in fact many crimes and this unambiguously qualifies.

Whether there is the evidence to prosecute particular individuals remains to be seen – but it is a crime.

I think there is a lot of truth in this article. Moreover, it goes to the heart of why traditional Tories hate the Cameroons.

Which is odd, because David Cameron is virtually the personification of a Macmillanite Tory. Indeed, the most visceral opposition to Cameron is from self-declared Thatcherites like the Cornerstone Group – Edward Leigh et al. Thatcherites, of course, being as far removed from traditional Tories as it’s possible to be.

Peel, Bright and the Manchester Free Traders ditched protectionism and the Corn Laws and turned the Tories of the 18th century into the (so-called) Conservative Party of the late 19th and 20th centuries.

I think I write this comment every six months on here. There’s no connection between the 18th century Tories and the 19th century ones other than the name. The modern Tories grew out of the Pittite Whigs, following the split in the Whig party of the late 18th century. Since then they have co-opted the Liberal Unionists, the Liberal Imperialists and the National Liberals.

16. White Trash

“There’s no connection between the 18th century Tories and the 19th century ones other than the name.”

Well tell that to the Conservative Party. As they put it on their website that I linked to above:

“The Conservative Party is the oldest political party in the world”

Of course the politics in previous centuries was a lot more flexible, kaleidoscopic and mix and match than the current ossified and rigid party straitjackets we are stuck with today. The fact is though that Pitt was a Tory / Conservative leader who then turned and led a faction, at least temporarily, away from protectionism to embrace liberalism, a trend which went into overdrive with the Thatcherites over a century later. As I pointed out this liberalism has a long history in the “Conservative” party, which you seem to agree when you say; “The modern Tories grew out of the Pittite Whigs, following the split in the Whig party of the late 18th century. Since then they have co-opted the Liberal Unionists, the Liberal Imperialists and the National Liberals”.

It doesn’t help either that the word “liberal” has been as badly perverted as the word “conservative”. The end result is that none of these words actually mean anything today and we are mostly left in a thick fog of confusion.

The whole thing is very confusing to most straightforward people who, quite reasonably, expect a “Conservative” to be conservative, and a “Liberal” to be liberal, but that’s all to the good as far as the spinmeisters in charge go, because the more confused the plebs are the less able they are to defend themselves.

17. White Trash

“Pitt was a Tory / Conservative leader who then turned and led a faction, at least temporarily, away from protectionism to embrace liberalism, a trend which went into overdrive with the Thatcherites over a century later.”

Sorry – and “liberalism” here means economic liberalism only, and not social liberalism, which is something else again.

18. Greenleftie

I am not sure if it is a battle between Capitalism & Conservatism, but another round in the endless battle between Capitalism & Free Market-ism.

The old boys long for a day when they had a semblance of control over Capitalism, which is true, as it needs regulation & guidance for it to work.

With the Free Market it is the other way around. The Market has control over them. Parasites like Diamond, & Co, screw everyone over, by ridding on the Free Markets Coat-tails.

Which is odd, because David Cameron is virtually the personification of a Macmillanite Tory.

Really? My impression is that he is basically a right-liberal in the modern conservative mode.

20. Trooper Thompson

@ greenleftie,

“the endless battle between Capitalism & Free Market-ism. ”

There’s no battle between these things. The enemy of ‘free marketism’ is and always was protectionism. In the olden days, this was the vested interest of the landed oligarchy, the old Tories. Later, when succeeding generations forgot the great benefits bestowed by free trade, people from different positions fell for the siren song, such as imperialists, who wanted to favour trade with the Empire, and sundry sectional interests who wanted protection from foreign competition.


Reactions: Twitter, blogs
  1. Liberal Conspiracy

    Are Capitalism and Conservatism now openly at war with each other? http://t.co/0UuNymsc

  2. Will Wilcox

    Are Capitalism and Conservatism now openly at war with each other? http://t.co/0UuNymsc

  3. James Smith

    No, they're hate-fucking. Next question. RT @libcon Are Capitalism and Conservatism now openly at war with each other? http://t.co/PwcVnwCe

  4. Carl Packman

    Diamond has now gone & Marcus Agius has returned. Is "gentlemanly capitalism" back on? Here's my bit on that from y'day http://t.co/q1spMGbW

  5. Tim Hardy

    Diamond has now gone & Marcus Agius has returned. Is "gentlemanly capitalism" back on? Here's my bit on that from y'day http://t.co/q1spMGbW

  6. Jason Brickley

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  7. leftlinks

    Liberal Conspiracy – Are Capitalism and Conservatism now openly at war with each other? http://t.co/331GaugV

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