POLITICS
Popular capitalism seems to be losing its popularity
NOEL MALCOLM
It has been a terrible week. Bulls have stampeded, nest-eggs have been scram- bled, flotations have been sinking and insurance companies have suffered storm damage. Observers have not seen such a shake-out of metaphors, allusions, puns and clichés in nearly 60 years. It had to come, they say: most of these metaphors had been grotesquely over-valued. Many journalists, having spent all the catch- phrases they owned (and in some cases, it must be said, having borrowed heavily), owe their lives only to the fact that in the Docklands the concrete façades have no ledges and the windows won't open.
Even Mr Lawson sounded slightly ruf- fled when interviewed in the radio car on Tuesday morning; he ummed with unusual frequency, and there was a slight tremor in his voice as he insisted that there was absolutely no reason for alarm. Sometimes one gets the feeling that the radio car is being driven along at high speed, jumping the lights. But the Chancellor's tremor may equally have been one of relief, as he thought about what might have been. The crash could have happened in early June. Or it could have happened next month, when the BP applications of a few million trusting citizens had just been safely gathered in.
Instead it is the underwriters who now face the galling prospect of having to buy £5 notes from Mr Lawson at £5.50 each. He feels obliged to hold them to it: the political costs of backing down on the BP launch woulu be too great. In the short term the Government will even be able to claim credit for having got such a good price for the family silver (though of course if the underwriting banks cannot shift the stuff, some of their losses will eventually come back to Mr Lawson in their tax payments).
But the real problems will arise next time round. The banks' commission was set very low this time, partly because of the confidence built up by successful flota- tions, and partly because the risks of guessing a selling price were seen as minimal when the share was already being bought and sold on the market. Both of those factors will be missing when electric- ity comes up for sale; and the financial and psychological difficulties will be com- pounded by the problem of sheer unpre- cedented size. At more than £15 billion, electricity will almost match the sum total of all the privatisation stocks preceding BP. Only a confident market can swallow such a large issue, however many slices you fillet it into. Interviewed again on Tuesday evening, Mr Lawson insisted that the privatisation programme had not 'stopped in its tracks'. But the programme is under threat, and a pause for thought is needed.
One point which needs to be thought about is the question of how 'popular capitalism' came to be such a key element of the Conservative programme. De- nationalisation was on the agenda for a long time; but wider share ownership was not something they talked about very much until the practicalities of selling off huge single enterprises forced them to beat up a froth of public applications. As recently as 1983, their manifesto discussed privatisa- tion purely in terms of the defects of nationalised industries. The only reference to share ownership was a phrase about the purchase of shares by employees and man- agement, which it described as 'the truest public ownership'. In the 1987 manifesto `popular capitalism' had an entire section, parts of which were positively messianic in tone. 'This is the first stage of a profound and progressive social transformation,' it said. 'Owning a direct stake in industry not only enhances personal independence; it also gives a heightened sense of involve- ment and pride in British business.' The vision of a sturdy, independent citizenry conjured up here is perhaps the equivalent of Joseph Chamberlain's dream that every man in England would own three acres and a cow. Yet it is far from obvious that a saver is more independent with a handful of share certificates than he would be with money in the bank. Share ownership may be more beneficial to the economy than, say, owning a building society account: a matter of economics, not of moral uplift. The much touted uplift is simply a change in the individual': perceptions. One way of putting this is to say that the new shareholder feels he has a stake in British It's about the reputation of the Met. Office.' industry. But another, more contentious, way would be to say that he feels he has a stake in capitalism. Getting people to approve of capitalism is also a laudable aim, but when their approval has been earned by giveaway discounts and automa- tic profits, it may 'only run skin-deep. Then both capitalism and the Conservatives need more than fair-weather friends.
The great leap forward into share own- ership has, in other words, been something of a political luxury. It is a luxury which may cost the Tories a heavy price in the short term, when uncomprehending small investors complain that they have been tricked into gambling their money away. Comprehension is at a premium now. Attitudes might be different, perhaps, if a fraction of the sums spent on fireworks and adverts had instead been used to teach the population one simple fact: that they are all shareholders anyway, through the insur- ance companies and the pension funds. Behind the 'share ownership revolution' there lies a great irony. Just 25 years ago, private investors owned more than two thirds of the shares in British companies; now they own less than one third. Over the same period, the proportion owned by pension funds and insurance companies has risen from less than a fifth to more than half.
If there is bitterness and incomprehen- sion now from first-time punters, this will at least warm the hearts of those on the Left who have long predicted the collapse of the capitalist economic system. The trouble is that this week's crash is plainly not an economic collapse at all, but a financial one. Therein lies the strength of Mr Lawson's position — but also its awkwardness. In distinguishing between the market and the underlying economy, he must tacitly admit that the shares boom earlier this year was not a reliable sign of economic health, and therefore not some- thing for which he deserved the credit. Similarly, he must defend the importance of the 'real' economy without conceding the left-wing argument that financial deal- ing is merely speculative and parasitical. I expect he will manage. The person who has most to fear from the Left is Bryan Gould, whose plan to 'leap-frog over Mrs Thatch- er' on the question of share ownership may now have sent him into free fall. If I had shares in Mr Gould, I would be thinking of going liquid now.
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