Beware the socialist wolf in woolly-minded clothing

Human beings like stability, and have always valued it. Now, however, we value dynamism too.

One of the most fascinating questions about deep trends in political economy, as the 21st century gets off to its turbulent start, is how the tension between dynamism and stability will play out. Human beings like stability, and have always valued it. Now, however, we value dynamism too. It is dynamism that brings us growth and greater prosperity at a time of huge technological change. We need iconoclasts who will turn the present upside down for the sake of the future.

One of the most fascinating questions about deep trends in political economy, as the 21st century gets off to its turbulent start, is how the tension between dynamism and stability will play out. Human beings like stability, and have always valued it. Now, however, we value dynamism too. It is dynamism that brings us growth and greater prosperity at a time of huge technological change. We need iconoclasts who will turn the present upside down for the sake of the future.

This book is by one of the Conservative radicals who launched Britain on the path of economic reform with Mrs Thatcher's privatisation programme. The contrast between the intellectual rigour of that generation of Tories and the dullness of the current generation makes the reader feel a touch nostalgic for the Thatcher era. It's not an emotion that I ever expected to feel.

At least David Howell and his colleagues grasped that the world economy was on the verge of dramatic change, demanding new types of policy response. And they understood early. A fascinating appendix describes the origins of the notion of privatisation in the mid-1960s, rooted in the conviction that the bureaucratic era of government had reached its final stages, and how it germinated in the rich intellectual soil of the Austrian school of economists.

The divisiveness of Margaret Thatcher's government has left many Britons ambivalent about its reforms. However, the process of privatisation was embraced across the globe, and has transformed (for the better) the world economy. Howell estimates that the global transfer of assets from the public to the private sector has added in excess of $2 trillion, or around a twelfth of the entire stock of tradeable financial assets.

It only takes a little reflection on the importance of global markets now to understand how significant this has been. That's before taking account of the beneficial impact of privatisation on the efficiency of crucial industries. Remember the six-month waiting list for a telephone line? The internet revolution might well not have happened without the deregulation and privatisation of telecoms.

That there is more radical change to come is the main thesis in The Edge of Now. What's more, it will be progress. People can be freer and better off thanks to new technologies. "The problem," Lord Howell writes, "lies with rulers and policymakers caught in a warp of yesterday's theories and of advisers peddling pseudo-science."

He is scathing about the inability of politicians to keep up with transformations in science, business and public attitudes. The "Third Way" comes in for particular scorn as a socialist wolf in woolly minded clothing: a muddling-through that ignores "the maelstrom of new thinking about government and the way societies work". Economists, such as the Third Wayers, are lavished with criticism, the principal charge being failure to pay attention to the real world.

I agree that new technologies and globalisation have the potential to transform society. But it is not membership of the centre-left or even of the economics profession that sorts techno-sceptics from techno-enthusiasts, the reactionaries from the revolutionaries. The dividing line falls, rather, somewhere on the stability-dynamism axis.

Indeed, Thatcher's reign exposed the tensions within her own party between One-Nation Tories, the stability-lovers, and the more radical elements. One can accuse exponents of the Third Way of many things, especially on the woolliness front, but they do specifically understand that the world has changed. I suspect it is their centre-leftness that offends the author of this book.

The Edge of Now is not an easy read, tackling its themes in a fairly abstract way. However, not many of us can claim to have changed utterly the world economy, as the architects of privatisation did. Here is an intriguing insight into what makes the new economy tick, from someone who helped light the fuse.