The Conservatives must not be afraid to stand up for free markets

Today’s younger voters were born after the Berlin Wall had fallen and the battle of ideas over economics and the role of the state had been won for a generation.

Since then, the world has changed. The Labour party has fallen under the control of people who do not believe in markets, free enterprise, or business.

We are now confronting a challenge similar to that which faced Margaret Thatcher and Ronald Reagan in the 1980s, where we must remake the case for the benefits of free markets and competition for society as a whole.

At this point, some people might stop reading and ask themselves “why should I care?”. So let’s consider what life would be like without the free market and the products and services it delivers.

The supermarkets we all use are some of the best in the world. They are where the majority of people do their shopping – for good reason.

The UK supermarket sector is now the most competitive it has been in living memory, with low-cost operators like Lidl and Aldi shaking up the market and putting pressure on their larger competitors.

This reduces prices for consumers, as market leaders must put in more effort to provide the best products for the lowest possible prices.

As the famous economist Adam Smith once said: “it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest”. Translated into modern terms, these businesses have to be competitive and strive to improve in order to keep their customers and survive.

Similarly, streaming services such as Spotify and Netflix have transformed the way we access music and entertainment. They have offered unimaginably more choice for lower prices for hundreds of millions of people of all ages right across the world.

What these products and services have in common is that they were developed by businesses competing with each other to deliver innovative, value-for-money offerings to meet the needs of the consumer.

The combination of the free market and competition delivers innovation, lower prices, and better goods and services for everyone.

In essence, a free market is the mechanism by which the collective wisdom of consumers is transmitted to the businesses that serve their needs. The market takes consumer choices and, through the price mechanism, tells businesses what they need to deliver in order to satisfy their customers.

Those businesses that manage this successfully will prosper and succeed – and, yes, make good profits. The businesses that fail will cease trading.

No one, least of all me, is pretending that the free market and competition are perfect. They are not, and there are many instances where information deficits or negative externalities disrupt the equation.

But the fact remains that this is the best system yet developed to create wealth and ensure that everyone gets access to the best possible products and services at the most competitive prices.

If you’re unconvinced, just look at the alternative.

History is littered with examples of countries trying to substitute the operation of the free market with government bureaucrats sat in offices attempting to centrally plan an economy.

Everywhere that this has been tried – from the Soviet Union to Mao’s China, North Korea to Cuba – has resulted in less innovation, fewer products and services, and a lower standard of living for the bulk of the population.

And that’s before you even consider the political and social cost of reduced freedom and a more controlling, autocratic state.

There are legitimate criticisms to be made of free markets, and it is true that sometimes supporters seem to back businesses uncritically, even when there isn’t sufficient competition or when those firms are behaving badly.

As Conservatives, we believe in businesses dancing to the tune of consumers, not the other way around. It is competition that ensures that businesses are focused on the needs of their customers, and which keeps them in check.

That means that there is a vital role for government to play in ensuring that markets remain competitive.

It’s why we have organisations and regulators like the Competition and Markets Authority, which makes sure that businesses can only merge if sufficient competition remains in the marketplace to protect consumers, as well as processes for consumers and smaller firms to raise complaints if they are exploited or misled.

But overall, a Conservative government should be proud to speak out in enthusiastic support of competitive free markets. Any political party that attacks this system is hurting the interests of ordinary consumers the most – and, as Conservatives, we shouldn’t be afraid to say so.

The future prosperity of our country and its people depends on us winning this battle of ideas for the next generation.