Lessons of the past 50 years show need to create a free-market Utopia

John Blundell writes the personal view column in The Daily Telegraph

Passport to Pimlico is a great film. A community weary of post-war austerity opts out of British bureaucracy. Choice in food, nylons and clothes suddenly becomes available. They erect barriers – and issue passports – to stop officialdom crushing the joy.

Fifty years ago everyone knew how grey life was under the socialist experiment. It was to defeat the Butskellite consensus of the 1950s that the Institute of Economic Affairs was created in 1955. We have won some splendid victories but there's no shortage of other dragons to be slain.

Some are even resurrected. The state identity card was abolished as pettifogging tyranny. Now the idea is reborn but with far more technical sophistication.

An early study, by Basil Yamey, urged the abolition of Retail Price Maintenance. The texture of everyone's life has been transformed by the result. We forget that supermarkets were effectively illegal under the old price-rigging but there is no thanks in politics. Who now recalls the 1979 election scrapping of exchange controls? We had to get authorisation to take even small sums abroad.

The core assumption the IEA contested since 1955 is that "the commanding heights" of the economy have to be in state ownership. Then we urged that every nationalised industry be sold. Today, only the BBC, the Post Office and the Forestry Commission remain in government ownership. Britain has taught the world privatisation, and the IEA claims paternity.

To celebrate our 50th anniversary, IEA authors have sketched out a future in the publication Towards a Liberal Utopia?* Will people in 2055 believe our taxation system was so convoluted even professionals were bamboozled? Will they think it comical we tried to tax "unearned income" when everyone can see savings are wholly benevolent?

Within a generation there will be one simple flat rate tax: 20pc. Nobody will bother evading. The Government has duties to perform but it need not take half our income and do what it does so badly. Some taxes do not invite tinkering. Inheritance tax will have gone. Tax Freedom Day will have moved from June to late February. And tax returns will be the size of postcards.

The notion that most children have to be coerced into council-run schools will have evaporated by 2055. We will regard the compulsion of parents and pupils as counter-productive and the equivalent of the old Navy press gangs. Private teaching institutions may emerge from China and India, the two dynamic capitalist nations of the 21st century.

The morale and income of teachers takes a huge leap when they become true partners in educational enterprises. The LEAs will evaporate after every family is given a voucher equivalent in value to what the state now spends to nurture illiteracy and innumeracy.

The UK will have seceded from both the Common Fisheries Policy and the Common Agricultural Policy, those vivid and corrupt failures. The grand project to regulate every aspect of life will have crumbled and the ghost of the EU will be a loose free-trade area. Once the penny had dropped that the billions living in Third World misery could become wealthy if we stopped suppressing them with "aid" and let them trade, their economies took off.

In 2005 our greatest industry is welfare by which "Everyone Tries to Live at Everyone Else's Expense". Our assumption is that most welfare functions will be abandoned by the state. Government may have a role as guarantor but not as the provider. Today's friendly societies are timid little ventures but could be re-empowered to take over most welfare duties and perform them with a kindness the Civil Service cannot match.

The NHS will have evolved by 2055. The restrictive practices under which medicine now operates will disappear. One clear measure of the Stalin-like methods of contemporary medicine is the complete absence of advertising. Neither expertise nor price is known and patients are kept in the dark. The NHS will not be abolished but will simply dissolve slowly as market alternatives emerge.

Original Sin will not be banished, but the criminal justice system will barely be recognisable to our contemporary eyes. Today, criminal behaviour is positively nourished by the state. Prisons are academies that teach crime. Half a century hence they will all be privatised and fees dependent on no recidivism. Private policing will flourish in neighbourhoods. Civilians and volunteers will put police back on the beat.

So what will my successors be battling against? There is never a shortage of human folly. Yet I think we are learning collective lessons. We've learned that free trade and open markets benefit everyone, especially the poorest. We've learned that the state is inept at active roles but can be creative as a regulator or adjudicator.

We've learned that duties we took to be those of local authorities are better done by others – especially schooling. The NHS is something of a British cargo cult now. In a generation we will have learned that medicine is much like any other expertise and needs neither mystification nor monopoly.

The IEA was sparked into being by the sage FA Hayek observing that political activity was futile without the weaponry of good ideas. It is ideas that eventually rule the world. The future belongs to capitalism; socialism will soon be a matter for archaeologists.

• John Blundell is director-general of the Institute of Economic Affairs

*Towards a Liberal Utopia?
£16.50 inc P&P

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