How could it be that the Tories have turned their back on the best of British industry?

Will Hutton
Photograph: PA

For the past 40 years, the Conservative party has always championed an economic theory. Whether 1980s monetarism or 2010s austerity economics, I thought them bunk. But while Nigel Lawson or George Osborne were clearly wrong, at least there was an intellectual underpinning for their actions, an underpinning you could shoot at.

You also knew that, one way or another, Tory policy was aiming to serve the mainstream business interest. British business represented by the CBI or the various trade association lobbies, notably the Corporation of the City of London, had privileged access and policy reflected their preoccupations. Business might sometimes complain, but in the round it knew it was heard.

No more. The conversion of the Tory party into the Brexit party has robbed it of both an intellectual structure and its reliable association with the business mainstream. Brexit has stripped the party of its brain and left it with just a frame of mind – Europhobia. So when Carolyn Fairbairn, the director-general of the CBI, complains, as she did last week, that both parties now ignore business, it’s a statement of a new political economy. The CBI may represent British-based and British-owned capitalism, but it is judged no longer significant enough for the Tories to heed. Our capitalism has fractured.

A new world of very private, transnational finance capital has emerged – hedge funds, private equity, billionaires of whatever nationality. It is they who now largely fund the Tory party and for whom Europhobia translates into a fabulous short-term profitable opportunity. Brexit Britain will be a regulation-light land fit for hedge fund and private equity capitalism.

A real capitalist in today’s Tory eyes is a super-rich Europhobe out to make fast money

In this world, Fairbairn is not a player. She may represent publicly quoted companies that collectively employ millions, but for a Europhobe such as the business secretary, Andrea Leadsom – and our “fuck business” prime minister – they are part of the Tories’ Remain problem. They dare to see merit in the EU’s single market and customs union. They warn that rupturing complex Europe-wide supply chains threatens hundreds of thousands of jobs and exporting into the EU will be further damaged by the imposition of EU tariffs. They are concerned that the British capacity to shape EU regulations that has so helped companies such as Vodafone reach global dominance is being shredded.

Worse, a growing number of these companies buy into the notion that their employees are members and colleagues rather than disposable workers, and, on top, worry that they need to trade sustainably. They put workers on their boards – Capita – treat them properly – Unipart and Kingfisher – or do more than pay PR lip service to the UN’s sustainable development goals – Unilever.

A real capitalist in today’s Tory eyes is a super-rich Europhobe out to make fast money who doesn’t buy into those politically correct nostrums, such as Jim Ratcliffe, billionaire owner of the chemicals company Ineos, Christopher Miller, co-founder of the asset stripper Melrose, or Crispin Odey of the hedge fund Odey Asset Management. They speak up for Brexit and will payroll the cause – more ideologically sympathetic capitalists than the liberal, decent, fair-minded Ms Fairbairn.

But the party cannot openly acknowledge its new loyalties and aims – it is aware that British society is badly wounded. It has to have something persuasive to say to the electorate, hence the riffs about the NHS, police officers and schools. Inherited fiscal rules from the ancien regime of May and Hammond can be torched. New rules, allowing much more freedom, are cynically adopted, not because today’s Tory party is intellectually convinced about the need for the state to create more and better public goods but because the new rules create the necessary headroom to spend the money to buy votes. They could be freely changed again as politics dictates. It is degenerate economics to build a land fit for Messrs Radcliffe, Miller, Odey and sundry Russian billionaires.

‘Decent, fair-minded’: Carolyn Fairbairn, director general of the CBI. Photograph: Toby Melville/Reuters

This could and should be a golden opportunity for the non-Conservative, pro-EU opposition. Labour does believe that the state should provide more and better public goods, ranging from a better environment via the Green New Deal to free broadband delivered by its proposed British Broadband Corporation, and there is a substantive body of intellectual argument to support its position. Of necessity, that means more public spending and borrowing and the rules Labour proposes serve that goal. The framework – a cap on public debt interest of 10% of GDP, balancing current public spending and current revenues over the economic cycle, and proposing a target for increasing the public sector’s net worth rather than the stock of public debt alone – makes sense. It is a welcome break from the past 40 years. That is not its weakness.

But it should worry Labour that Fairbairn’s remarks are aimed at it as well. Its leadership is too indiscriminately critical of all business and wedded to the socialist transformation of capitalism. Not even the Chinese and Cuban Communist parties believe that.

Given that capitalism’s universal supremacy is justified because it works, how can it be shaped better to deliver the common good? Part of the answer lies in better and more public goods, tougher progressive taxation to address inequality and stronger social provision, all of which Labour is committed to.

But another answer is scaling up what the better publicly quoted companies are trying to do in opposition to hedge fund capitalism. Here Labour is silent, worse, creating enemies who could be allies. Mainstream British business, trying to do the right thing, should be part of a broad-based Labour coalition that wants, if a second referendum is ever achieved, to stay in the European Union and build a capitalism that serves the common good.

The Tories have abandoned the ground. It is there for Labour – or the Lib Dems if they have the bravery and chutzpah – to occupy. My fear is that only another drubbing will convince Labour to be more discerning about capitalism – who its enemies are and who are its potential allies.

• Will Hutton is an Observer columnist