Not much was left of Canadian conservatism after Stephen Harper was through with it. The government he led attempted little and achieved less, yet somehow contrived to alienate enough of the population to fritter away a majority in just four years.
Electoral defeat was not, however, his only legacy. Much more serious was the atrophying of conservatism as an intellectual force that resulted from his tenure. It wasn’t only that the Harper government did so little, or that so much of what it did should not have been done—from deficit spending, to industrial subsidies, to the barring of foreign investment, to the narrowly targeted “boutique” credits it marbled into the tax system. It was that Conservatives ceased even to talk about the policies they would like to pursue or the vision of society that underlay them.
Not only did the Harper government decline to discuss its governing philosophy, but it also forbade anyone else on its side from doing so. Whole issues fell from the Conservative party’s lexicon—privatization, deregulation, large-scale reform of the welfare state. Inevitably, this led to the issues being discredited more broadly: if “even” conservatives were not talking about them, they must really be beyond the pale.
In their place was introduced a mindless, vicious partisanship, mixed with the familiar tropes of populism—the tailoring of policies whose only purpose was to please specific segments of the Conservative coalition, with the associated whiff of strongman politics. This was not accidental. You need me, the populist leader tells his followers, to defend you from them. The “them” may vary—it may stand for criminals or terrorists, immigrants or foreign workers, Big Business or Big Labour, or even, improbably, Big Government. But the appeal is always the same: Do not bind me with rules and institutions and checks and balances. Give me maximum discretionary power—to protect you.
While a populist revolt has upset established parties across much of the Western world, in Canada it was embraced at the highest ranks of the Conservative party. It worked for them for a time, but when its usefulness came to an end, not much remained, either of conservatism or the Conservatives.
The last election could have been worse. The Conservatives were not annihilated—they were rebuked. In opposition, and especially with the choice of a new leader this May, they have the opportunity to take stock and think again. It is crucial that they seize it.
They will have to resist three temptations. One is to turn themselves into mush, reject all “ideology,” and “move to the middle”—becoming just as incoherent as the Harper government, only nicer. Such a party might win, but it would not deserve to.
The second, opposite temptation is to retreat into one or another corner of the Conservative coalition—a simplistic libertarianism, say, or a doctrinaire social conservatism. The Conservative tent is and must be broader than that.
The third, and worst, is to ape the nationalist populism that carried Donald Trump to victory in the United States—in effect betting more heavily on the Harper government’s populist experiment. Its other failings aside, there are reasons to doubt that this strategy would be a winning one—among them the example of the 2015 election.
Rethinking conservatism does not mean reinvention so much as rediscovery: a return to first principles, yes, but also a fresh consideration of how they might be applied to current problems. There is still a market, I think, for what conservatives are selling. More important, there is a need for conservative alternatives on the most urgent matters now facing the public, from an aging population, to national security, to health care, to poverty reduction, to climate change, to the problems of Indigenous Canadians, to the whole tangle of social, economic, and legal issues bound up in the term “identity politics.”
But if such proposals are to persuade, they must be grounded in principle. If Conservatives pull together only a bunch of policies that test well, without offering a coherent underlying rationale, they will be no further ahead. They need to build from the ground up: from first principles, to second principles, and only then to policy.
Some part of conservatism is dispositional, a habit of mind, almost a personality type: a skeptical attitude toward sudden change; a respect for tradition (novelist G. K. Chesterton called it “the democracy of the dead”) and for institutions that have survived and evolved through generations of trial and error; a preference for the smaller scale over the larger, for voluntarism over coercion, for Edmund Burke’s “little platoons” of community organizations over the Leviathan state; an aversion to the grand design, what economist Friedrich Hayek called the “fatal conceit,” that pretends to a greater knowledge of society and the economy than any person or office could ever possess.
And yet what modern conservatives wish to preserve is largely the legacy of previous generations of liberals; the conservatism they defend is only a species of liberalism. Conservative or liberal, we are all part of a broader tradition of Western liberalism that dates back to the Enlightenment. (There is a pessimistic strain of conservatism that predates liberalism, but was for most of the last half-century an outlier—though it has echoes in the bleak, dystopian nativism of Trump and Putin.) Conservatives are, in essence, conservative liberals, guardians of what is best in the liberal tradition, and skeptical of attempts to improve upon it.
The conservatism that emerged from liberalism is grounded in some well-known foundational principles: that each person is the best judge of his own welfare, and should be free to pursue his own vision of the good life so far as he does not impede the right of others to do the same; that every individual is of equal inherent worth and dignity and entitled to equal protection under the law; and that power must at all times be contained and limited.
Whatever the different strains of conservatism, what unites them is a belief in the need to check arbitrary power. The Burkean might put more emphasis on the constraining wisdom of tradition, the libertarian might stress individual choice and autonomy, but what is common to both is an unwillingness to assign great or discretionary power to some over others, whether such power is concentrated in state or private hands and whether its purposes are malign or benign—perhaps especially if its purposes are benign.
The Enlightenment tradition that conservatism protects therefore looks for ways to limit and divide power, to contain and channel it—through the rule of law, the dictates of convention, the test of periodic elections, the scrutiny of a parliament and a free press, the competitive discipline of the market. In other words, it is the opposite of populism. It seeks not to free the hands of those in positions of great power, but to tie them, to limit their discretionary power, and to oblige them to work within certain defined institutional constraints.
This idea can be expressed in two words: limited government. Conservatism is not anti-government, for the coercive powers of the state are sometimes necessary and legitimate. Neither is it synonymous with small or less government, as if smaller and lesser were always to be preferred. It means government that, large or small, minds its place: that behaves in a predictable, rules-based fashion within known boundaries. Being the creation and servant of the people, it has such powers as we choose to give it and no more. The necessity of intervention has therefore always to be demonstrated: the burden of proof is always on its advocates to show there is no other, less coercive way of achieving the same ends.
We are familiar with this concept in the legal sphere: in the presumption of innocence and in the rights guaranteed under the Charter, which are subject only to such “reasonable limits as may be demonstrably justified in a free and democratic society.” But the same could be said of government’s role generally. Unless we think that regulation and taxation are good things in and of themselves, we should presumably wish to do no more of either than is strictly necessary. In a phrase, government should do only what only government can do.
The assumptions that inform that conclusion are not controversial. There is a large body of literature that defines “market failure” and outlines the functions that can best be served through government intervention: providing “public goods,” such as defence, for example, for which it is impossible to charge consumers, or to exclude those who do not pay from their benefits; correcting for “externalities,” such as pollution, the cost of which is not captured in the market price of a product; guarding, as in insurance markets, against either “adverse selection” (the tendency of insurers to offer insurance only to those unlikely to claim it) or “moral hazard” (the tendency of purchasers to buy insurance only when certain to make a claim); and regulating natural monopolies while warding off unnatural ones.
What might distinguish a conservative approach to governing would be to actually take these ideas seriously, insisting, as a condition of intervention, on the presence of some demonstrable market failure—a test that would seem to rule out, among other activities, the operation of a state rail monopoly, a state postal monopoly, a state liquor monopoly, and a state broadcaster.
The belief in limited government is at the core of modern conservatism. There have been other offshoots of the conservative movement—Red Toryism and social conservatism, for example—but since at least the 1970s, limited government and free markets have been central to the conservative message. The fact that Red Tories have at times seemed uncomfortable with this message does not mean they are somehow akin to socialists; it suggests instead that socialism itself can be viewed as a kind of conservatism—left-wing critiques of the market, after all, often rest on concerns about community and order, ones that echo the preoccupations of the pessimistic, pre-liberal brand of conservatism I alluded to earlier.
And yet there is no neccesary contradiction between a concern for the individual and an ideal of community. Far from the communitarian caricature of conservative individualism, which describes a society of alienated, atomistic individuals who have little connection to each other, the conservative’s view merely posits that the individual is the essential unit of social cohesion. In a society increasingly divided among mutually hostile identity groups, our uniqueness as individuals is not only the truest expression of our diversity—it is the one thing we all have in common.
As I’ve argued before, in a lecture for TVO’s Big Ideas series, the market is the economic expression of this diverse individualism: it is not an anarchic jungle, as it is sometimes construed, but what Hayek called a “spontaneous order,” built out of millions of individual choices, independent and yet interdependent, guided by price signals rather than planners’ dictates.
A liberal society seeks not to suppress individual economic choices or to force them into conformity, but to reconcile these choices with one another. Markets evolved in response to this goal, operating on two principles: competition, yes, but also co-operation.
What most distinguishes a market economy is the absence of coercion. It is reliant on mutually beneficial exchanges between willing partners: buyers and sellers, workers and employers, savers and investors. Competition ensures only that those arrangements are indeed non-coercive; exploitation exists in market economies, but only where competition does not.
The result of this co-operative regime is not disorder but, as Hayek suggested, order—not in spite of the absence of coercion, but because of it. There are no black markets in a free market: there is no way around the market price, not because it is the law, but because it is not. Above it, no one will buy from you; below it, no one will sell to you.
This is not how we are used to thinking of markets. The market is generally both attacked and defended as what it is not: as the absence of government. Conservatives tend to make the case for markets in libertarian terms—the dynamism of free enterprise, unleashing the entrepreneur. This is the sort of argument likely to persuade those least in need of persuasion, i. e., those whose first priority is freedom. To those who place a greater value on order, however, this line of reasoning is profoundly disturbing. To them, it sounds as if private greed has been allowed to take precedence over social responsibility.
For their sake, then, it is important to stress how markets work—they do not just satisfy individual wants, but also temper them. Greed will always be with us, but competition puts limits on how far it may be indulged, as do prices: each acts as a constant check on our use of scarce resources, forcing us to ration our consumption—to take account of others’ needs—whether we wish to or not.
Markets, then, are not simply about the individual, nor are they all about freedom, in the sense of liberation from all restraint. They are, rather, social institutions, just as governments are—and both have a role to play.
The market enforces the collective interest in the efficient use of scarce resources—resources that, though individually owned, are nevertheless society’s as a result of their scarcity: because one person’s use of a resource denies it to every other, society has an interest in ensuring it is used sparingly.
We assign individual title to them, indeed, for precisely that purpose: people who own things directly tend to care for them better. When it comes to the productive use and exchange of those resources, moreover, owners are endowed with an important responsibility: to make a good or service that is of more societal value, based on the price that people are willing to pay for it, than it cost to create it—that is to say, to make a profit.
The company that cannot perform this duty is forced to cease operations. And the people to whom we entrust the responsibility of enforcing that duty are consumers.
The objective of conservatives, then, should not be to liberate business but to enslave it—to the consumer. That, after all, is the point: we produce things, not to give ourselves something to do, but so other people can consume them, and they do the same for us. As Adam Smith wrote more than two centuries ago, “Consumption is the sole end and purpose of all production, and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer.”
And yet the opposite principle seems to guide much of Canadian public policy, whose credo would appear to be that the purpose of consumption is production—or, at any rate, that it is the consumer’s duty to submit to the needs of producers. What are subsidies to industry, or tariffs and quotas and other limits on competition, but attempts to spare producers from the judgment of consumers?
The producer interest seems to hold particular sway when the competition is from abroad. Why do consumers pay two and three times the market price for milk, cheese, eggs, and other foods? Not only because the domestic supply of these is strictly limited under federal and provincial agricultural policy, but also because competition from abroad is effectively banned, via tariffs as high as 300 percent. Why are Canada’s domestic airfares among the highest in the world? Because foreign airlines are forbidden to fly point to point within Canada. Why are our cellphone rates and the management fees on our investments so exorbitant? Because these industries, too, are largely protected from outside competition.
Suppose the assumption that consumer interest should come first was entrenched in policy—not as something to be balanced or traded off against the producer interest, but in the sense that Smith implied: as the public interest, to which the producer interest should at all times be subordinate.
Indeed, rightly considered, the consumer interest is the producer interest. That is, it is the interest of efficient producers—the kind consumers are likely to favour. The conflicts are not so much between producers and consumers, but between efficient and inefficient producers. Through their choices in the marketplace, consumers winnow the former from the latter and so drive all producers toward greater efficiency. It is only through such relentless, competition-driven efforts to lower costs and increase productivity that advances in living standards become possible.
A decision, broadly advertised, that in all such matters the government would put consumers first would thus be something of a revolution. We can endlessly relitigate why this or that particular subsidy is a bad idea, or we can make a rule: the consumer is sovereign. We will not force people to pay for things with their taxes that they would not willingly pay for on their own.
Conservatives have to learn to make the case that markets are social institutions in their own right. Equally, they must be prepared to acknowledge the market’s limitations. If conservatives want to get a hearing on the market’s enduring strengths, they must also be willing to make the case for government.
Finding the right balance between the market and the government is not, as the pragmatist might have it, a matter of brokering some unsatisfying compromise in which neither is allowed to do very much. Rather, it involves letting each perform the task appropriate to it. That may sound self-evident, yet some of the worst policy failures stem from attempts to harness one or the other to purposes for which they were never intended. This is particularly true when the issue is distributional fairness.
Individuals are best positioned to judge what is best for them, which is why we allow the choices of consumers to decide what goods and services are produced. But what we consider to be a just distribution of wealth, how much one person should have versus another, is by nature a collective judgment. We use markets to coordinate individual choices in matters that belong properly to the individual. But collective judgments are best implemented by the state.
It is a legitimate criticism of markets that they cannot be trusted to distribute income fairly. And yet we are always trying to coax them into doing so, not through a system of taxation—taking from the rich to give to the poor—but by the back door, as it were, by regulating prices, legislating a mandatory wage, or otherwise gumming up market processes and hoping for the best. So we put a floor under wages and think this will solve poverty. Or we limit increases in rents, hoping that will put more people in affordable apartments. Sometimes we do away with prices altogether, always using the same justification: that it is the best way to benefit the disadvantaged.
It’s easy to see how policies that drive prices up—such as those that restrict the supply of certain foods to prop up prices paid to farmers, or those that put tariffs on imported clothing for the benefit of domestic manufacturers—are regressive. But the artificial suppression of prices is equally so. To the extent that prices are bent to distributional ends, they cannot serve their usual function of matching the supply of scarce resources to the demand. The resulting misallocation is not just inefficient—it is also unjust. The costs of inefficiency are not, as a rule, distributed fairly: they tend to be borne disproportionately by the poor and the marginalized, while the benefits accrue to the well-to-do.
Whenever shortages and surpluses arise, there are corresponding sets of “insiders” and “outsiders”: those inside the market, able to buy or sell as they please, and those locked outside. When there is a surplus of supply over demand, the outsiders are those unable to sell their wares; when there is a shortage, it’s those unable to buy who are excluded. The insiders, needless to say, do rather well out of this arrangement: they face that much less competition for whatever it is they are selling or buying. But their gain is the outsiders’ loss. This kind of arbitrary reassignment of opportunities is especially invidious when one considers just who is most likely to be found in either group. It is not the rich, after all, whose labour is typically made surplus by minimum wages. Nor are they, as a rule, the ones unable to find an apartment, or a doctor, or any other commodity made scarce by price controls.
Whether or not resources are allocated by price, they must still be allocated. If price is not the deciding mechanism, something else will be: lineups, social connections, or that harshest of laws, last-in, first-out. And who is most likely to find their way to the front of the line? Who has networks of friends and associates who will tell them about that doctor who will see them now, rather than in six weeks?
A well-known principle of justice holds that a society’s first priority should be to better the lot of those worst off among it: to “maximize the minimum,” as the philosopher John Rawls put it. If we take that seriously, then our primary concern should surely be for the welfare of outsiders, not insiders—and that means dismantling all barriers to entry. At any rate, giving everyone, rich or poor, the benefit of the same subsidized or regulated price is an oddly haphazard way of helping the poor. It’s not even all that good at soaking the rich. Fixing wages does nothing to redistribute income from employers to employees, since employers can always escape the imposition simply by hiring fewer workers. These concerns, of course, are relevant only when we have the poor in mind. Most often we use markets to redistribute income without even the pretense of concern for social justice, doing so simply in response to the demands of this or that interest group.
If we did nothing else, then, but agree on this principle—that the only moral basis for redistribution is from rich to poor, rather than from city to country, or consumers to producers, or west to east, or young to old, or any of the countless other ways in which we stealthily redistribute income this way or that without acknowledging it—the transformation in policy would again be profound. If we agreed, further, that redistribution is the job of the government, not the market, we would be even further ahead.
This consensus would not involve determining how much we should redistribute. That is for a democratic government to decide. It would simply mean that when setting policy, we would distinguish between allocation (what gets produced, at what price, and in what quantities) and distribution (who gets how much income).
When we say that wages are “too low” or that prices are “too high,” what we really mean is that some people are too poor. That’s a distributional problem, not an allocation problem, and it should be addressed by distributional means—through the tax and transfer system. Instead of fixing a minimum wage, for example, we should guarantee a minimum income; instead of fixing rents, we should directly assist those who are in trouble. This approach would not distort markets, and it would make clear exactly who pays and who benefits.
Just as we can redistribute through the state without distorting the function of markets, so, too, can we make a commitment to free markets that implies no abdication of the government’s responsibilities. Indeed, markets literally could not function without government. Neither could a political constituency for markets long be maintained without an activist state behind it, ensuring that those the market leaves behind are not left to go without.
Clarifying the respective roles of state and market in this way—an approach sometimes summarized as the “social market”—might get conservatives a hearing when it comes to the reform of public services. They can make the case that these services can be delivered in a way that harnesses competition and consumer choice without sacrificing distributional equity.
Ensuring the fair but competitive delivery of services can be tricky, especially when it comes to such spheres as education and health care, where the consumer is also the product. Providers can try to improve their “output” by being selective about their “input,” that is by excluding hard-to-teach children or patients who are too costly to treat. But that doesn’t mean the market should automatically be excluded from playing a role.
For example, it is quite possible to maintain full public funding of schools and health care without insisting that every school or hospital be publicly owned and staffed by unionized public employees. There is a difference, that is, between public finance and public provision: private operators could be allowed to compete to provide these services, on the condition that they remain free to the public at the point of delivery (and to all members of the public, without discrimination).
But those are the exceptions. Where possible the rule should be to provide benefits in cash. Public services that are provided as services—public housing, daycare, the free drugs available to those on social assistance—tend to be available only when and in the precise form the government thinks they should be provided. Give beneficiaries the cash equivalent instead—send the money to parents rather than to schools or day-care centres, to students rather than to universities, to workers rather than to the Canada Pension Plan—and they can then choose among competing providers. After all, we give people money to buy food rather than insisting they shop at government grocery stores.
A more immediate example of the possibilities of a “social market” approach—and a huge missed opportunity for conservatives—lies in the area of the environment.
Conservatives are commonly supposed to believe in personal responsibility, the notion that each of us is responsible for our own actions and should bear the costs these choices impose upon ourselves or others. Awareness of these costs is important for efficiency: when people are informed of them, they tend to make better decisions. But it’s no less important for the environment.
The economic problem and the ecological one are fundamentally similar. Whether your concern is higher productivity or saving the Earth, the objective is to minimize waste. And the instrument appropriate to both is full-cost pricing: prices that embody all of the costs of producing a good or service—including the environmental ones. In some cases, this would require government intervention, to build into the price of market transactions costs that have until now been sloughed off on others—the “externalities” mentioned earlier. In others, it would mean withdrawing previous interventions, such as subsidies that artificially encourage resource depletion.
Environmentalists increasingly get this, which is why there has been such interest of late in tackling environmental problems through market solutions such as road tolls, emissions trading, and carbon taxes. That conservatives have been so slow to take them up on this is as short-sighted as it is cynical.
If conservatives denied the existence of climate change, they could plausibly ignore this issue. But as most now—at least publicly—accept that it is real and the result of human activities, they must propose their own solutions.
It would be one thing if the Left were proposing only the most heavy-handed regulatory or subsidy schemes to address it; conservatives might then be justified in digging in.
But, in fact, it is the Left that has been advancing the market-based approach—carbon pricing—while the Right insists on the most costly and intrusive command-and-control policies. To be sure, the Left usually proposes both, aiming to layer carbon pricing on top of existing subsidies and regulations. All the more reason for conservatives to make their own distinct case for carbon pricing as a replacement for, rather than a supplement to, current policies, and as a means to cut other taxes rather than finance more subsidies.
Carbon pricing is the biggest win for markets in decades. Conservatives should have taken the idea and run with it. They had the opportunity not merely to show that they care about the environment, but also to make space for market approaches more generally. If you like what the market can do for your air or water, conservatives might have said to the public, can we interest you in what it can do for your schools or health care?
Ihope my meaning is clear. This is not a call for a more hard-line, purist, take-no-prisoners conservatism. Nor is it a suggestion that conservatives should water down their principles or become more like the Liberals. Rather, I propose applying conservative principles to different questions—conservatives should address different audiences and speak in a different language than has traditionally been the case.
Above all, it is an argument for transparency. People need to know where your policies come from. They need to know who you are, what moves you, whether you have some sort of—yes—hidden agenda. The only way to disarm those suspicions is through full disclosure. Set out the broad grounding concepts first—consumer sovereignty, outsiders over insiders, maximize the minimum, and so forth. Gain consensus on those, and the policies will sell themselves.
The days of conservatism as a revolutionary force in the style of Reagan and Thatcher, Manning and Harris, are gone. The movement must instead be rebuilt as a patient, persistent intellectual force, one that can win minds and not just the odd election.
Its objective should not be to move to the middle, but to move the middle. The point is neither to pander to public opinion nor to ignore it, but to persuade people to adopt your point of view. The entrepreneur in business knows that the greatest rewards accrue not to those who simply give people what they already know they want, but to those who make them want things they never knew they wanted before. So it is in politics.
For politics is not merely “the art of the possible.” It is the art of enlarging the possible.
A version of this article originally appeared in the May 2017 issue under the headline “Back to Basics.”
