Douglas Carswell's Blog

Are we free market or crony capitalist?

We like to think of Britain as a free market economy. But are we?

In a little over a decade, state spending as a percentage of GDP has increased from around 35 percent to approximately 50 percent. That's higher than in certain former Soviet republics.

It is not simply that so much economic activity in Britain is now state activity. Much of the rest that happens is dominated by, or sanctioned through, officialdom.

Despite the perennial promise by politicians to deregulate, the torrent of new rules keeps on coming. One small businessman in my constituency told me that running his company was less to do with entrepreneurial flair, than with persistence and form filling. 

Banks have been nationalised, and credit is – some might argue - rationed the way food used to be.   

From financial services to food production, businesses increasingly find they are forced to respond to what top down regulators demand, rather than want customers and the market want.

We hear much talk about promoting trade. But that should mean removing barriers to trade, not mercantilism and the promotion of certain contractual interests on behalf of specific companies. 

Commercial success in a free market economy ought to hinge on supplying willing customers with products and services at a price they are willing to pay.  In Britain today for many corporate contractors, success is more a question of obtaining a legal claim to a slice of future tax revenue. 

Crony capitalism doesn’t just give capitalism a bad name. It also explains why our share of global economic output keeps falling.

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