But this limited reaction, like the dog that did not bark, itself carries a couple of important messages about the place of politics in the modern world.
One is that economic policy is not really a contentious issue in British politics; the other, that whoever happens to be prime minister of a medium- sized country does not matter much to the rest of the world. (If the latter point seems a bit cruel, try to remember who is the current prime minister of Italy.)
In fact, the markets on Friday were a bit glum. But they were not really worrying about the tussles of the Tories. No, they were bothered by a slide in German bond prices triggered by poorish inflation data from Baden- Wurttemberg and weak US treasuries influenced by strong- er-than-expected durable goods sales in America.
These two messages, however, do demand a little further examination, for there is one area of economic policy that is of profound importance not just to financial markets but to the society of all developed countries.
More of that in a moment; first, from what we know of the people and policies, does it matter not just who is PM, but which party is in power?
If you try to identify the points of difference between present policies and those that might be adopted by a Blair government, it is quite difficult to pick out anything significant in the short term. The balance of fiscal policy? No difference, for both would have to push the Public Sector Borrowing Requirement down below 3 per cent of GDP, as set out in the convergence criteria under Maastricht.
Monetary policy? Maybe a slightly greater element of independence (and correspondingly greater internal re- forms) to the Bank of England, but the change would be very much at the margin. Structural policies such as privatisation or labour market reform? Nothing significant, for both those changes have been more or less completed in Britain, and they are not going to be reversed.
Move beyond these elements of economic policy and there are differences, but they tend to be within the parties rather than between their leaderships. Europe is the prime example, for Mr Major and Tony Blair are much closer together than either is with large numbers of his colleagues. Social policy? Well, maybe there are some significant differences, but they are not the ones you might think. I will come to those shortly. However, while they are of great long-term importance, they will not have any short-term economic impact.
Go back 10 years and there was an enormous difference in the economic policies of our two parties, but as in other countries the experience of the 1980s has forced convergence. There is a right way and a wrong way of running the government of a medium-sized developed country. All sensible political parties know this, and since both our government and our opposition are pretty sensible, that is really all there is to say. Why chase around trying to invent new - and by definition untried - policies when there are plenty of sound ones that have been used elsewhere in the world?
This leads to the second point: that governments have become much less important. The decline in state power probably started about 20 years ago, reversing a trend that was at least 200 years old. So it looks likely that it has a long way to run. The shift is so new that it is not easy to see quite where the power is going. The financial markets are an obvious beneficiary; so are international media groups; and the experience of the past week suggests that such global pressure groups as Greenpeace are also increasingly influential. But I suspect the shift of power will go far further than this and include important entertainers, writers and sportsmen and women. Rod Stewart would be better-known in the world than Mr Major, partly because he has been around longer, but also because entertainment has become a global business while politics remains a domestic one.
There is, however, one area where national economic policy remains enormously important, and that is the long-term balance of fiscal policy, for that will help shape the relationship between the individual and the state over the next generation. Get the balance right, and the state will be able to fulfil its obligations to the individual; get it wrong, and it will be unable to do so and thereby hasten its own decline.
The key area where the state has been accumulating liabilities it will be unable to meet is in pensions. The chart, taken from the new OECD Economic Outlook, shows the way present pension contributions are inadequate to fund the state pension schemes in the US, Germany and Japan. Much the same position applies to all the other G7 countries. France and Italy are in the same sort of mess as Germany, Canada in a similar position to the US. Only Britain has a state pension scheme that is just about in balance, thanks partly to less unfavourable demographics and partly to the curb on pensions introduced by the Tories, linking them to prices rather than earnings. Even we will have a problem during the first two decades of the next century.
This is the sort of policy area where governments are important, for it is something they directly control. These liabilities are not the sort of area where financial markets can provide an adequate discipline - the issue is too long-term a prospect for them to exert leverage. Eventually they will force change, but by then the damage is done.
It is an interesting example to take during a week of high political drama. The conventional wisdom is that in as far as a Labour government would be different to a Tory one, it would be because the role of the state would be slightly greater - though for the reasons noted above, the difference would be marginal.
Actually, pensions is one area where a difference may be emerging. A couple of weeks ago, Frank Field, a thoughtful Labour backbencher, outlined a plan to take pensions off the government's balance sheet: people in the state pension scheme would save for their own pensions under a scheme set up by the government, but separate from it. Government would help fund the pensions of the low earners.
We put the Field plan to a Cabinet member, and he was deeply dismissive: it was dismantling part of the post-war welfare state, and he could not understand why anyone listened to him.
Well, actually the Field approach is being taken very seriously indeed by Mr Blair, who sees it as a way of making sure that the state does not, in this area, make promises it cannot fulfil. Failure to meet expectations would risk an even stronger backlash against an incoming Labour government.
None of this contradicts those two messages from the political turmoil: there is not much difference between the economic policies of the two parties; and politicians do not matter much. But, in as far as there would be some difference, it is quite possible that Labour would be fiscally more responsible than the Tories have been.Reuse content