The single market is essential for the free enterprise Margaret Thatcher championedby Oliver Kamm / January 24, 2018 / Leave a comment
These are strange times in Tory politics. A rational conservatism would understand that, while the state has a crucial role in economic management and welfare provision, its knowledge is limited. Discretionary intervention has unanticipated costs and diverts scarce resources to uses that aren’t efficient. The primary role of government in economic management is thus to maintain a framework of rules within which consumers, businesses and investors have the confidence to take long-term decisions.
Fortunately, there’s an institution that embodies this principle and puts it into effect. It’s the European Union, which administers a framework of rules on competition, mergers, cartels and state aid. Its legislation is intended to prevent firms from colluding in anti-competitive practices, like price-fixing or predatory pricing in order to drive a weaker competitor out of the market. Last year the European Commission imposed a fine of €2.4bn on Google for abusing its dominant market position in search engines. Also under European legislation, cartels are illegal and corporate mergers can be limited or prevented if they reduce competition. And EU treaty law prevents national governments from giving unfair state aid to their own corporate sectional interests.
This is an approach that Tories should instinctively sympathise with. The rules are applied, moreover, with a pragmatism that conservatism also prizes; industrial subsidies fall foul of rules on state aid but development funding for poorer regions does not. It is a sad irony that Cornwall, which voted for Brexit in 2016, is set to lose £60m in annual funding from the EU when Britain leaves.
This body of legislation is part of the European single market, an ambitious scheme that has eliminated customs duties, and non-tariff and regulatory barriers among its members. Tories should feel gratitude to a political leader who was at the heart of this project: Margaret Thatcher. She signed the Single European Act which moved forward the required legislative programme to achieve the single market by the end of 1992.