The 'one nation' answer to our financial chaos

Neo-liberalism fi-nally died last Sunday when the US authorities were forced into the biggest rescue operation of capitalism in financial history.

That's the bold claim of Phillip Blond, the provocative young Conservative academic who argues that the financial disaster we are seeing played out on a daily basis is the final unwinding of the neo-liberalism introduced by Ronald Reagan and Margaret Thatcher in the 1980s – into which Labour bought so completely.

Related articles

• Bush launches $700bn rescue plan and confesses he didn't realise how severe problems were
• Lloyds to close hundreds of bank branches
• Plunge in house prices outstrips the crisis of the 1990s
• Potentially more toxic than sub-prime: the £6.6bn of 'Alt-A' that spooked HBOS investors
• Russian boss says new US President will lift economy
• US $1 trillion bailout is under threat from political skirmishes
• Three 'credible' buyers circling Lehman Brothers in London
• The history of the financial meltdown
• Hedge fund horsemen of the apocalypse
• Gruel all round as the Victorian workhouse diet makes a comeback
• Paul Vallely: Spivs get rich. Greed prospers. I'm no expert, but this cannot be right
• Search the news archive for more stories

But for Blond the crisis in "monopoly capitalism" also presents something much more interesting – a real chance for a renaissance of radical Conservative thinking and a new economic deal. "We need a new Bretton Woods to get us out of the current meltdown. But most of all, the Conservatives need to show that their options for the future would not have led to the current meltdown."

Blond wants the party to tell the right story – to explain why sound investment could restore stability. He points out that pre- 1973 only 10 per cent of investment was considered speculative, whereas today it is 90 per cent. In 2007, he adds, domestic bank loans to manufacturing accounted for just 2.3 per cent of all lending.

Blond wants to go back to the radical but traditional Conservatism of the "one nation" phil- osophers of the 19th century – thinkers such as William Cobbett, John Ruskin and Thomas Carlyle who argued for working-class self-sufficiency and a much wider form of ownership throughout society.

"Red Tory" is the description Blond has for his thoughts, as well as for the title of his new book. As he says: "For me the greatest challenge is how we solve the conflict between capital and labour so that everybody has a chance – through wider share ownership, decentralisation, mutual funds, guilds, co-operatives, for example – to own a little of something."

Instead it is the few who own rather a lot today; so much for the much-vaunted "trickle-down" wealth that neo-liberalism was supposed to deliver.

"That failed totally. Today there is more concentration of wealth in fewer hands than at any time in history. At the same time, real wages have declined and most people are worse off in real terms than 30 years ago. People have been offered credit instead of wages," he adds.

The numbers are compelling. In 1976, the bottom half owned 12 per cent of all wealth, excluding property. Today, they own just 1 per cent.

Blond claims there is "nothing left of the Left" because of its alliance with liberalism. "That both traditions became conflated in New Labour only serves to explain quite why the present government is so awful."

But he adds that if Conservatism is to be more than just moralism plus the market, a far-reaching analysis of what went wrong and how is needed, so we can plan a new economic deal in which everybody shares in the growth. He is concerned, though, that too many in the Conservative Party still cling to the busted neo-liberal model.

"The great danger for the progressives is that they want to offer us a reheated version of Thatcherism which repeats all the problems of the past. Conservatives need to acknowledge that poor people are poor not just because of dysfunctional behaviour, but also because they lack capital and so the ability to invest and transform their lives."

So far the reception he's had from the Conservatives has been encouraging. He's speaking at next week's conference and he works with advisers such as James O'Shaughnessy, head of policy and research, feeding ideas to both David Cameron and the shadow Chancellor George Osborne. There's a pamphlet in the pipeline for Policy Exchange, the Tory think-tank, on stimulating local economies, and he's also talking to Mark Prisk, the shadow competition minister, on ways of extending micro-finance to the poor.

Unknown to the public only a year ago, the 42-year-old theology don from Cumbria University has burst on to the scene with his challenging writings in the press. The feedback to his critiques of both Labour policy and neo-liberal Conservatism, he says, has been amazing, with interest coming from people on the left and right of the political spectrum who are fed up with the orthodoxy of their parties.

Smollensky's at Canary Wharf in London's Docklands is where we meet, a stone's throw from the towers of Lehman Brothers and Bank of America, which last week took Merrill Lynch under its wing. He's just back from lecturing in Italy, where he says the movement for encouraging local ownership of business is going strong. Blond demands nothing short of a revolution in ownership. He's not anti-markets, at least not those that deliver efficiently, but he's totally for business and enterprise if it can be organised in ways to deliver the maximum benefit for the maximum number of people.

The measures he would like a new Tory government to adopt include local investment trusts, co-operatives, guilds and partnerships. Allowing small businesses to survive in small towns is top of his list for reviving local economies. "There is nothing wrong with Tesco but it needs to be controlled. Far better to have 100 fewer Tescos but 1,000 small shops where people are owners," he says, adding that economies of scale can be achieved through companies sharing resources.

Blond is hopeful that today's Tory leaders are open to steering policy away from the past. As he says: "At first, Cameron and Osborne tried to brand the Conservatives as a more successful variant of New Labour. They repudiated Thatcherism but only so as to embrace its Blairite correlate. But now I think they understand that something much more radical is required if they really want to share wealth and mend the broken society."

Born and brought up in Liverpool, Blond has an exotic heritage: Irish Catholic, Scottish, French and Lithuanian. His family ran cinemas on Merseyside and an art gallery in London. He's related to Anthony Blond, the flamboyant publisher, while his stepbrother is Daniel Craig, the James Bond star. At Cambridge, his supervisor was John Milbank, one of the world's leading theologians, with whom Blond is writing another book, Blue Socialism and Red Tory, a series of debates between them on what creates a good society.

Blond says wealth must be distributed to increase self-sufficiency. "Many of the changes Thatcher introduced were good, like a property-owning democracy, but she was unable to deliver this properly." He doesn't pretend to have all the answers but he does have hundreds of ideas for change. At the heart of Toryism, he explains, is the family, the local community and voluntary work for the greater good.

He blames the old Whig party for being in thrall to the French and American revolutions that indirectly created today's unfettered free markets. Remember, he says, the Conservatives of the 19th century were opposed to the liberals and laissez-faire economics. They can do it again.

With that, Blond steps out into the sunlight to head back home to the Cumbrian fells to muse a little more. He will be back.