Popular capitalism is popular again

 

David Cameron’s speech was the best of the three party leaders’Ā  discussions of what kind of capitalism we want in the future.Ā  They have made it a topical matter, as they press on with their attacks on bankers and bonuses, reflecting considerable public disaste for some of the extremes we have witnessed and are now paying for as taxpayers.

In 1988 I published a book entitled “Popular Capitalism”. In it I Ā sought to promote wider ownership – shares for everyone, property ownership for the many. I drew together the differing strands of policy. There was privatisation, allowing or encouraging the public to become part owners of some of the largest businesses in the land. There was employee ownership, at its best in the sale of National Freight to its employees. There were share incentive schemes for many private sector companies. Council house sales, homesteading, policies to promotote self employment, and pension plan investments with generous tax breaks were all designed to make owning the experience of the many rather than the privilege of the few.

This idea needs updating and developing for the era after the Credit Crunch andĀ  bank collapse. We wish now to ensureĀ  that some Ā future large bank cannot go down and end up with massive taxpayer subsidy. This government has adopted the ideas of living wills and controlled administrationĀ  should a large bank get into trouble. It’s a pity they did not do that last time round. More importantly, the government needs to pursue a vigorous competition policy for banks as well as for many other sectors of the economy. It was the mega mergers the last government allowed or encouraged which made the problems so much worse in the financial world.

The challenge today is to create a capitalism people are proud of and wish to work within. It is surprisingly difficult to sustain the merits of capitalism to some UK audiences. They say what did capitalism ever do for them. One could ask, do they not value the car and the plane, the new pharmaceuticals and the computers, the mobile phones and the televisions which competitive free enterprise in the west has designed and delivered? Don’t they value the staggering range of goods now being delivered to their doorsteps from the highly competitive factories of China and India?Ā  What part of modern living standards do they regret compared with a hundred years ago. Which did not come from free enterprise?

They also caricature thoseĀ  who support the creativity and flexibility of free enterprise as wanting a kind of lawlessness. This could never work. Any sensible exponent of capitalism knows there needs to be a strong rule of law, to make criminal acts difficult and to promote competition and fair dealingĀ  forcefully. It is the role of government to write those rules that are needed and to enforce them. It is the role of markets to offer choice and jobs, investment and consumption, innovation and tradition. Of course some in markets get it wrong, make mistakes, go to excess, produce bad products or services. So do some in the public sector. The advantage in many cases of doing things in the private sector is twofold. There is choice, so you do not have to have the less good service. And there is a faster way of removing the shoddy and the poor performer. As customers go elsewhere so the business that is poor has to contract or die.

In my lifetime so far I have seen capitalism bring fridges and tvs, cars and washing machines, computers and phones into reach for most, whilst raising the quality and lowering the price. With an offer like that, surely capitalism can also be popular?

 

64 Comments

  1. Mike Stallard
    January 21, 2012

    Yup, we get it. Capitalism is good. Tescos is far better than Ash and the Convenience Store.

    But down here in the bottom of the pecking order, don’t forget, are your voters. No longer do we live in a little cosy world of the corner shop, Mr Mainwaring at the bank and Corporal Jones at the butcher. There is, also, damn all chance of our breaking through to start our own shop or factory. We are also entitled to go on Deal or No Deal and to “play the lottery”.

    We do get a lot of hectoring and tax and we put up with it manfully.

    We shop in a totally impersonal environment where it is very rare to meet people we know. We buy our cars from people who we do not know. We go on the internet and talk to distant people we do not know. We are always on our phones talking to people in the cloud.

    Capitalism? Rosicrucianism? Amphictochtalopathy? So?

    1. libertarian
      January 21, 2012

      Mike,

      Sorry your post isn’t correct.

      There IS a place for individual retail and its a place that is growing and set to expand.

      Like all things the world moves on, innovation removes the old and makes way for the new. Tesco, sainsbury et al provided big benefits to the public, but they aren’t the future.

      Of course you can start a business, with new technology its cheaper and easier than ever. As an angel investor I get dozens of business plans every week from budding young talented people wanting to be entrepreneurs .

      If only we had a political structure that encouraged it. The EU directives and idiotic legislation such as AWD and the even worse IR35 prevent people starting in business for themselves at no expense at all. Then the tax and regulatory framework makes it harder. Still it is very possible to open a shop or factory though.

      I also don’t recognise your world of not knowing anyone. One huge phenomena where I live is the Tweet Up. A regular face to face meeting of people that follow each other on twitter. I go to a least 5 different Tweet ups a month with anything from 20 to 50 attendees at each. Its great business and social networking

  2. Guido Fawkes
    January 21, 2012

    It may amuse you to know that the dogsbody who stuffed promotional copies of “Popular Capitalism” into envelopes when it was launched was me.

    Reply: We all had to start somewhere – it could only be up from there!

    1. Carl Peter Klapper
      September 25, 2013

      It may amuse you to know that I copyrighted (but did not publish) my own book called “Popular Capitalism” in 1986. In the following years, I expanded on my original treatise and am pleased to report that the second edition of “Popular Capitalism” is available, thanks to electronic publishing. My brand of “Popular Capitalism” is based on the application of economic reasoning to sovereignty. The result is a capitalism which is more populism by way of anarchism than remotely representative democracy.

  3. Pete the Bike
    January 21, 2012

    What is most surprising is that a lot of people see the state as the good guys not private enterprise. The state has invented nothing ever. It certainly provides massive regulation of dubious benefit, it taxes enterprise to sustain itself, it uses that money to encourage dependency so that it’s core voters support it’s theft from the productive, it raises prices hugely through it’s depredations and supports every old inefficient dinosaur industry. It lives as a giant leech attached to society independent of and unresponsive to any human input. It convinces people that it is necessary to prevent the markets from exploiting them yet it is the ultimate exploiter and user of violence. A quote from Joseph Goebbels sums it up.
    ā€œIf you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.ā€

    1. uanime5
      January 21, 2012

      The state is the good guy because it introduces regulations that protect people, while the private sector seeks to exploit them. Minimum wage, health and safety, maternity leave, and employment tribunals were all introduced by the state despite the strong opposition of the private sector because it harmed their profits. I can’t recall any law designed to promote employee well-being that was championed by the private sector.

      If the private sector wishes to be be seen as the good guys they should start promoting employee welfare rather than profits at any cost. Until then they will remain the wealthy abusing the people.

      Reply: Many companies exceeded state requirements long before they were put into law.

      1. Mike Stallard
        January 21, 2012

        Saltaire – the factory complex built for the workers by Sir Titus Salt near Leeds is a superb example of capitalism at its best. Robert Owen, Carnegie, Bill Gates and the Rowntrees are several other examples of people – quite often Quakers – who actually worked to improve people’c conditions.

      2. Alexis
        January 21, 2012

        So private sector employers are 1) automatically wealthy and 2) abuse employees to maximise their profits, unless legally forced to do otherwise.

        Presumably this is how you personally would conduct yourself, if you ran your own business? Surely not.

        For the record, I have a family member who runs a business. I work with her sometimes. She supports the EU, follows all regulations meticulously, and takes extremely good care of all her employees – well above and beyond what the law requires.

        Itā€™s true that she doesnā€™t lobby parliament to change employment laws.

        But there are many reasons why the private sector does not lobby parliament to change employment laws. Not least of these is that their main business is to supply goods and services, then pay their people, pay the taxman, and keep up with all the rules and regulations ā€“ it takes time and commitment.

        There isnā€™t a legal department or a finance department to do it all necessarily ā€“ just a couple of people multi-tasking.

        Also, they want to keep their own employees happy, both because they want to keep them and often because they actually like them, and appreciate the work they do.

        In other words, like a family, the main focus and energy goes into your people, not everyone elseā€™s.

        Finally, the private sector is not a large cohesive group, but many thousands of disparate organisations with varying levels of resources. Everyone from the window-cleaner to Pan-Global Pharma Inc.

        So itā€™s rather unkind to a lot of hard working people to assume the private sector donā€™t lobby for change, because they want ā€˜profits at any costā€™.

      3. Geoff
        January 21, 2012

        In a free market employers and employees can negotiate a mutually beneficial relationship. In the state sponsored crony capitalism we have now markets are so distorted and restricted that neither side is free to negotiate, how is that a good thing?

      4. Bob
        January 21, 2012

        uanime5
        Do you have any commercial experience?

      5. libertarian
        January 21, 2012

        As normal more socialist rubbish from you. No the private sector doesn’t seek to exploit people. That is deluded.

        Go away and do some research into Victorian businesses such as Cadbury and Armstrong, Rowntree and Port Sunlight and many others who did all these types of things and more 100 years before politicians got around to making laws about it. There are literally 100,000’s of small family run businesses that have ALWAYS looked after the interests of their workers far beyond that which is required by law.

        I think you’ll find if you look at the data that Industrial Tribunals hear more cases bought against public sector organisations, quango’s and trade unions than private sector firms. Have you never thought is odd that public sector organisations are so sexist, rascist and homophobic that they need to employ vast departments of diversity officers to try to contain the problem whereas all but the very biggest private sector outfits don’t need them?

    2. stred
      January 21, 2012

      Thanks for this invaluable summary.

  4. lifelogic
    January 21, 2012

    I agree fully.

    However bad government is, as always, so often the problem how can we get good government that is the question? For example:-

    On pension schemes the system is constantly adjusted to cheat investors. Investor cannot invest knowing the rules will not be changed next year to rob them as Gordon Brown style.
    So they do not.

    Regulation allows, for example the selling of loans with interest rates of perhaps 300% and life insurance at 5 times the price it should be to the vulnerable without them even understanding this.

    The legal system has absurd, head you win tails you win or do not lose systems – to encourage pointless and damaging litigation for the benefit of the profession and the courts.

    Regulators of rail, water, gas, electricity and similar get far too close to those they regulate and mainly look after themselves rather than the public. With a constant clamour for yet more regulation such as the absurd hip packs still partly in place. This is often encouraged by industry groups who too can benefit from absurd complexity.

    Many product are designed with build in redundancy, inefficient use of energy and systems that intentionally make repair too expensive. All this not clear to the buyer at the time of purchase. Regulations permit this and should sometime address it by forcing goods to have sensible life cycles rather than build in failures. Also forcing it to be clear at the time of purchase. The computer software and hardware industry is particularly at fault here.

    Benefit rules always encourage the feckless and discourage the responsible.

    Employment laws are absurd.

    Tax laws absurdly complex and as clear as mud to many.

    Energy rules are run according to an absurd new “green” religion (because it benefits the big tax big government agenda and can be sold to some of the gullible non scientific public by Huhne types).

    Government and the legal system evolve, not to improve the system for the public, but to improve it for those working in these monopolistic industries. The big, incompetent government status quo all cheered on by the institutionally left wing BBC, the left wing state sponsored “arts” and academic sectors. Government expends to endless levels, regional, parish, county, Scotland, Wales, Westminster the EU and the world stage with endless duplication and countless bodies working often directly against each other.

    There is nothing that government is not happy doing so long at they can raise the money and pensions to do it – regardless of how destructive and pointless it is. Many government organisation are happy working directly in opposite directions to and fighting with each other what do they care if pensions and wages are paid.

    1. lifelogic
      January 21, 2012

      I have, like many no doubt, been doing my and my wife’s tax returns. My affairs are fairly complex so it now takes me nearly four weeks of my 47 work weeks just to pull it all together and file it. Plus the cost of software bookkeepers and accountants. Even simple questions on the form can require you to read an essay of notes and go back to your records before you can be sure of the answer.

      The system is absurdly complex and I still have quarterly VAT and monthly PAYE to sort. How am I expected to find time to run a business as well? The system is a huge creator of pointless jobs that impoverish the country as a whole and encourage the black market.

      1. lifelogic
        January 21, 2012

        Needless to say the complexity of my tax affairs and the need for several companies is driven by the absurd rules of tax system (as Tony Blair will doubtless confirm given the interesting complexity of his).

      2. oldtimer
        January 21, 2012

        This morning it is reported that those serving on the front line in Afghanistan will be fined Ā£100 if they do not get their tax returns in on time (end of January). This applies to Warrant Officers and senior ranks. Quite how they are supposed to do this in their particular circumstances are unclear. However the HMRC jobsworths say there can be no exceptions; their hands are tied. Perhaps those same jobsworths should be required to make a personal visit to their sangers to complete the paperwork.

        1. lifelogic
          January 21, 2012

          Also try ringing the revenue with a query you will be lucky to get a sensible answer or even a reply often.

          1. libertarian
            January 21, 2012

            You managed to get them to even answer the phone? *Stands back in awe* I’ve been ringing for a week and not had anyone at HMRC even bother to answer the call.

      3. alan jutson
        January 21, 2012

        Lifelogic

        Agree with your points absolutely.

        Surely the Govenment has a duty of care, and a responsibility, to only pass leglislation which can be understood by the vast majority, to whom it relates.

        With 11,000 pages of explanation required, our Tax system has long since passed its sell by date.

        My returns which are fairly simple now, have been completed by my accountant for years, his charges I regard as reasonable, given it SHOULD give me complete peace of mind.

        The question is, why should I ever need to use an accountant in the first place, if the system was fit for purpose.

      4. stred
        January 21, 2012

        I gave up about 7 years ago and withdrew from business which attracted too much accountancy. Now aged 65, i wonder how young business people are expected to continue.

    2. Disaffected
      January 21, 2012

      I totally agree.

  5. fox in sox
    January 21, 2012

    Dear John,

    As well as the popularity of the products, there is increasing interest in the process. While containing an element of reality TV, sows like the apprentice and dragons den do give some insight into how start up companies start.

    I suspect that other programmes in this genre would be hits, and help the economy.

  6. Rebecca Hanson
    January 21, 2012

    The future version of capitalism should work to help people analyse the value of their contribution to society which their capitalist/work activity generates.

    Value is generated:
    – from the tax they pay,
    – from the personal income they have which they spend with economic benefit to society,
    – from their ability to lead a better life in which they can better care for those around them and contribute more to society because of their income.
    – from their ability to invest in activities with long term benefits because of their income.
    – from the way in which their engagement with work facilitates their personal development and the development of others around them.
    – from the benefits of the products or the services they offer to society.

    However this needs to be offset against possible negative effects such as
    – if the products or services being generated are likely to have a negative benefit to society (in many case awareness is needed of risk).
    – if the activity is having a negative impact on the health of the individual engaged in it.
    – if the activity is having negative environmental impact
    – if the activity is having negative consequences for the family and society around the individual.

    These things are relative of course – they need to be assessed in the context of other ways the individual could work/operate.

    This kind of utilitarian thinking provides context within which David Cameron’s comments about Labour endorsing city activity to fund social projects can be better understood and analysed. That type of thinking is a reasonable part of what should have been a wider context. Important elements of that context were missing for understandable reasons – it is not easy to think clearly in this way.

    If we do think in this way we also need to think about the engagement between the state and the individual in work. What happens if that individual knows they need to leave a job because of the risk and potential negative benefits they can clearly see but they cannot afford to? If David Cameron want to claim any moral high ground he needs to address this question.

    So in short, future capitalism needs to be constantly moving on from its non-beneficial aspects. To do this it needs not only to regulate/nudge organisations but also to support individuals in taking responsibility for assessing the consequences of what they do.

    Chapter 6 of ‘Masters of Nothing’ touches on an idea it then fails to properly understand. The feminist aspect of the city they are referring to is about people who think in this more connected way, it’s not about women specifically.

    Comments welcome. This is written very much off the top of my head and I’m sure there’s lots that can be improved about it.

    1. oldtimer
      January 21, 2012

      My comment on your definition of value:
      So far as a business is concerned the primary definition of value is the last on your list
      “from the benefits of the products or the services they offer to society.”

      If a business cannot or does not add value (make profits) then it will fail. All the other values you listed ahead of the last value are, in fact, a (hoped for) consequence of the last, the ability of a business to add value. It is that value that gets distributed eg via dividends and taxes or reinvested in the business, and enables the business to meet its payroll and to purchase products from its suppliers.

      If a business cannot make the returns on capital invested, either through the force of competition or the burdens of taxes and insidious regulation it will either fail, seek to relocate to a more favourable place to operate or seek to reinvent itself as a different business. Examples of this abound everywhere. Politicians often do not seem the realise the consequences of actions, calculated to appeal to their electorates, on the capitalist businesses on which they depend for taxes and the multitude of other social engineering wheezes they think up. Some undoubtedly are desirable. Others are quite useless and drive businesses abroad or out of business. The UK post WW2 track record reveals that the political class has made a hash of it.

      1. Rebecca Hanson
        January 21, 2012

        I really appreciate your thoughts oldtimer and will take time to think about them at length.

        A few initial reactions –
        What if the business is adding value and generating capital in the short term but by its activities is elimination other activity which is of much greater value in the longer term?

        Of course I have to absolutely agree with you with the issues of the behaviour of our political classes. In the 1970s my dad was an economic expert on employment relations. We always understood how much the inappropriate strength of the unions at that time was rooted in the vast failures in management of British industry by what was in effect a class based elite. He and his contemporaries worked tirelessly to change the way managers were being chosen and trained and to bring in more professional practices in management.

        It’s so, so worrying to see this government behaving in the way management behaved the – so clearly setting up vast problems for Britain. For a long time teachers were apathetic to what Gove was doing. They’d seen so much top-downism and inappropriate policy over they years they’d given up thinking about it. It’s difficult to describe the momentum of hatred which is gathering now as the consequences of such ignorant governance begin to trickle down to the masses (mainly in terms of the suffocation of necessary pragmatic policy development by ludicrous ideological fantasy).

        Sigh.

        1. Richard
          January 21, 2012

          You often have a dig at Mr Gove in your posts whatever the actual subject is about
          I realise you are an expert in this area and I merely a customer of the education system and so I approach this comment with great trepidation. Please be gentle with me !

          I do feel, whilst radical change in your profession, yet again, is painful and disruptive, that what Mr Gove is attempting may eventually be good for your profession and for us, the end users.
          For example, giving teachers more power to run their own schools with less LEA control must be good?
          The recent new acadamies near where I live are over subscribed and have decent funding, better community involvement and have improved their results.
          Whats not to like?

          1. Rebecca Hanson
            January 21, 2012

            While it may be intuitively reasonable that giving teachers more power to run their own schools with less LA control should be good the theory and evidence related to the reality of what happens conclude that there will only be benefits to:
            a) well run schools in failing LAs (but of course a far better solution would be to address the failings in those LAs)
            b) specific schools at the expense of other schools, with the damage done to the other schools being far worse than the benefits to the schools which gain.

            There is a caveat to that, which is that if the powers and responsibilities of the LA remain intact (i.e. only small numbers of schools are removed from their control so their overall ability to plan is not compromised and the schools which are removed have appropriate oversight) then a viable system may be created. This is what labour were trying to do.

            If you look at the history of the academic research into the economics of education it becomes obvious that Gove has adopted free market thinking which was tailored to emerging markets in education (which do not involve state responsibility for all children), muddled them with some seriously worrying extreme right wing ideology which assumes that the less you organise things the more efficient they will be and has applied them to a situation the theory explicitly recommends against.

            If you talk to anyone who’s actually ever been involved in planning education they will tell you a wide variety of reasons why Gove’s policies will have horrific practical consequences which are so obvious to anyone with experience but he is clearly blind to.

            And if you look into the justification for his policies you find none. Just a London bubble of very young people with little life experienced who’ve talked to each other until they’ve become like a cult, who believe anyone who explains reality to them is some kind of ‘evil person’ who needs to be eliminated from the system and deserved to be labelled as being an ignorant and self-interested ideologue. The extent to which the representative and democratic systems of consultation in education have been shut down and the able people involved have been replaced with ‘cult disciples’ is terrifying and heartbreaking.

            Gone are the democratic systems of local planning for schools. Instead we have the decision of the king in response to the pressure group which pleases him and massages his ego most.

            The theory of the economics of education understands that local organisation creates economic efficiency and is important in creating local accountability and democracy in education. No-one who understand education can imagine why Gove can’t see that. He has’t provided any justification as to why he thinks these conclusions no longer hold, just some disturbingly narrow, semi-digested waffle about some schools in the US and Sweden he clearly hasn’t properly researched.

        2. forthurst
          January 21, 2012

          “We always understood how much the inappropriate strength of the unions at that time was rooted in the vast failures in management of British industry by what was in effect a class based elite.”

          The rights of unions and their shop stewards to blackmail and break industries had rather more to do with the unfettered power which the Labour Party had awarded them in exchange for its financial viability. This was augmented by the failure of successive Conservative governments to see the elephant in the room, a blindness which they have practised and perfected over the years. If, consequently, industries did not always attract the brightest and the best, that would have been rather predictable.

          Why exactly do you believe that attempting to pitch academic exams at the centre of the Bell curve is such a good idea? (Are standards being relaxed intellectually and academically-ed)
          Can you confirm that this approach has been universally adopted throughout the advanced and advancing world?

          1. Rebecca Hanson
            January 21, 2012

            I don’t think pitching academic exams at the centre of the Bell curve is a good idea (and I’m not sure why you’ve got the impression I do). All assessments should be constructed to determine whether students have achieved specific criteria and the result of the assessment should communicate to the fullest extent practical which criteria the students can demonstrate proficiency in.

            The conversion of several years study into a single grade is regrettable as so much is lost. Much work is being done to look at the viability and benefits of giving more detailed marks and the conclusions which are being reached as as result of this research are different to those which emerged a decade ago because of the power of the internet and improved ICT systems.

            I can’t confirm your assertion forthurst.

            I’m happy to let your descriptions of the reasons for inappropriate power to sit alongside mine. Both have validity.

          2. forthurst
            January 22, 2012

            Rebecca

            When the recent controversy over exam standards flared I decided to look at papers in the A subject which I had sat many years ago in Maths and Physics. I was quite shocked by what I found. There had clearly been a very substantial reduction in both the scope and difficulty of the papers; I could not see that they either stretched a student with aptitude in those subjects or prepared them adequately for a university honours degree course. Literal interpretations of what I write are not always intended and I do not have the educational background to identify at what precise intellectual level these papers were aimed or even whether such considerations in themselves would now be considered thoughtcrime.

            I recall talking to a production scheduler during the 70s at a factory that made precision engineering products. The management wish to instal a Production and Inventory Control system better to be able to accurately price their products and to be able to quote accurate lead times. The scheduler was also the shop steward and he knew what was happening on the shop floor but on behalf of the workforce had negotiated an agreement whereby the management were banned and in particular were not enabled to time calibrate each production process in move, set up and run times. Therefore we could not supply a Production and Inventory Control System because it is not possible to execute Finite Capacity Planning if you cannot supply the computer with actuals. Do I recall that BMC used to sell their minis at a loss?

          3. Rebecca Hanson
            January 22, 2012

            I’ve done quite a lot of analysis of exam papers at A-level standard and beyond, which takes some doing as in many cases the material taught has changed while questions look similar. They most obvious trend has been from students studying an A-level standard course and being assessed with A-level standard questions to them being taught to the exam. The tail wagging the dog. That’s not easily visible from the papers and it’s also the main reason why students find exams easier now.

            Re: unionisation issues – yes I’m more than aware of the kind of issues you raised. This in one of my dad’s books……….We discussed these kinds of issues and possible resolutions fully, flexibly and constructively at home and I also took an option in comparative international cultures in employee relations when I finalised in Management Studies at Cambridge.

          4. Rebecca Hanson
            January 23, 2012

            Ooops – lost the link. It was to a book called ‘The Closed Shop’ from 1982. You can find more info about it on Amazon.

  7. Mazz
    January 21, 2012

    JR – ‘They have made it a topical matter, as they press on with their attacks on bankers and bonuses, reflecting considerable public disaste for some of the extremes we have witnessed and are now paying for as taxpayers’.

    avaaz.org – ‘Over 80% of the [RBS] bank is owned by the British taxpayer through a company whose board reports straight to Chancellor Osborne. Letā€™s remind him that he is accountable to us, not the greedy gamblers at RBS’.

    Please sign an on line petition against RBS bonuses.

  8. Brian A
    January 21, 2012

    An excellent piece. What we need are more people like yourself willing to take these arguments to the larger public at every opportunity. At present many in this country have bought into the idea that the government is able solve the country’s economic and social problems and that people other than themselves will pay. In order to get elected successive governments have indulged, to varying degrees, this sentiment of dependency, even though they have had to borrow massively to deliver the services and entitlements that the tax take has been unable to fund fully.

    Which ministers in the present coalition are making the case for a smaller government, able to live within its means, and a greater role for genuinely free markets?

  9. Atlas
    January 21, 2012

    I find my support of the free-market system (as we have it) dimmed somewhat when I see rent-seekers like the entertainment industry getting copyright extended to 70 years. As an industry they have already been paid hansomely for their monopoly on these products, yet they are greedy and wish to get more.

    Who did they, as an industry, lobby to achieve this munificence? Was it the UK civil Servants? was it UK MPs? or was it via the unaccountable EU?

    Adam smith recognised this cartel problem back in the 1770s in his “Wealth of Nations”. Unfortunately neither he nor his present day namesake the “Adam Smith Institute” have proposed a solution.

    1. Bazman
      January 21, 2012

      The entertainment industry have had their finger in the dyke for years. To this day they are still arguing copyright like they did with the invention of cassette tape. In Russia you can but all manner of copyright material in the street from market stalls and soon this will be redundant. Transmission of information is becoming faster and maybe in the future almost instant. What strategy have they come up with other than prosecuting people and getting others to do their work? I personally do not care if a performer only earns a million instead of ten. The argument that the funds raised can be used for other illegal activities is a red herring, so can legitimate business and nobody is talking about restricting that. They will ultimately have to deal with it, or not as the case may be.

  10. Bob
    January 21, 2012

    What qualifications do you need to become a Prime Minister or Chancellor of the Exchequer?

    Just looking at the decisions made by people like Gordon Brown, I wonder why did he felt qualified to make a decision about selling 400 tonnes of gold?

    It’s not private enterprise that cause our multitude of problems but our politicians.
    If the politicians would just bug out, I’m sure everything would soon sort itself out.

    How has Jacqui Smith got the nerve to appear on BBC and LBC radio?
    She was caught (with difficulties in her expense claims-ed).

  11. waramess
    January 21, 2012

    There is but one way for capitalism to operate sensibly and that is where free competition is maintained.

    Over the decades government has allowed competition to disappear in some sectors such as banking and energy by allowing an unreasonable degree of consolidation.

    Corporates are always striving to avoid competition because a competitive market is always the most difficult to prosper in and buying up the competition is always the eaasiest solution.

    If government simply oversee robust competition in all sectors of the economy the rest will follow.

  12. uanime5
    January 21, 2012

    John originally all Capitalism represented was monopolies and cartels and it wasn’t until the state made both illegal that competition and innovation occurred. Fettered capitalism is the best capitalism.

    Also exponent of capitalism only want there to be a strong rule of law to protect themselves and their property. They are indifferent to laws protecting the property of others and are bitterly opposed to laws making them pay taxes. This is why so much white collar and corporate crime occurs.

    1. Richard
      January 21, 2012

      You are absolutely right.
      The current close relationships between big business and big governement in the West has given us what I call cartel capitalism.
      All business tends towards monopoly and we are in a phase of capitalism where that trend is very evident.
      Seen any new car companies, banks, building societies or insurance companies starting up anywhere recently?
      Entry into many market places is restricted by complex rules and regulations agreed between established players and Governments
      What we need is to make it simpler for new ventures to start up and thrive in these cartel markets.

      1. Bazman
        January 21, 2012

        I’m going to start my own Tesco. Just like they did in the olden days.

    2. libertarian
      January 21, 2012

      Total and utter nonsense.

      Why do you make this stuff up? You are totally confused. Free market capitalism is that which is practised by every corner shop, pub, cafe, self employed plumber, gardener, its practised by the millions ( 4.2 in UK actually) of SME’s. Business has been practiced like this for nearly 1,000 years in the UK. Indeed another small French leader 300 years ago accused us of being a nation of small shop keepers.

      Capitalism has never been REPRESENTATIVE of cartels or monopolies in fact its small free market enterprise that prevents the domination of cartels.

      No cartel invented telephones, TV, computers. No cartel developed cars and heavier than air flight.

      In fact my friend if you actually listed those operations that act as cartels and monopolies I would suggest 80% plus of them where CREATED by government.

      Here for instance is the oldest surviving business in the UK. It has successfully been operating in a capitalist free market free of cartels and monopolies before we EVEN had a government. It began trading during the reign of Henry VIII and is still going strong.

      http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8868803/Britains-oldest-family-business-opened-when-Henry-VIII-ruled.html

      1. Richard
        January 22, 2012

        Libertarian,
        If you took a little more time to read what Im trying to say, before you sound off, you might realise that I am on the same side as you.
        I want better capitalism, more open markets, more opportunity for smaller businesses to succeed.
        Yes, free market caplitalism is alive and thriving in many areas, I see it every day, all around me with enterprising start up companies.

        However there are many markets areas where free competition does not properly exist and entry to the marketplace is restricted partly by the powers of the existing operators and partly by many restrictions placed in the way by Governments and I feel that trend is increasing, especially with huge amounts of EU legislation.

        Try to break into the following market areas, see what barriers to entry and chances of long term success there are for the small start up company :- supermarkets, car manufacturing, defence industry supply, energy production and supply chain, insurance, banking, building societies, TV and radio broadcasting, pharmaceuticals supply chain etc etc.
        At the smaller end of the market, try to open a free house pub or start a new taxi company in any major city and see what you come up against.

        Im not saying that it is impossible to actually do this, ther are some notable examples who do succeed but I want to see less barriers, less Government interferance and more free markets.

        Ive worked in small companies all my life and now help many other companies to start up and develop, so I see daily the struggles they face in trying to break inti and compete in markets which have complex and unfair restrictions which protect the existing big players.

  13. outsider
    January 21, 2012

    Whatever the dictionary definitions may say, most ordinary people draw a distinction between free enterprise, competitive markets and the spread of wealth and control, which is popular, and unpopular “capitalism”, which is seen as the concentration of capital and power in the hands of a few anonymous agents in “investment banks” or in the hands of a few rich bosses (as Marx thought of it and as we have more recently seen in Russia).
    As a big fan of the “popular capitalism” espoused for instance in your book, which I still have to hand, I watched in horror as those who created it proceeded to destroy it, partly by fixing the rules in the interests of the investments banks (particularly after 1986). In the case of British Telecom and British Gas, the Conservative government, having cynically waited until they were off the books, then destroyed them as a matter of policy in the name of competition.
    Sid eventually got the idea: it was not about the people owning their own great companies but about netting a “windfall” while the going was good. Individual share ownership has plummeted and control has reverted to the anonymous (and now politically unaccountable) few.
    What is now proposed on all sides seems to be a rehash of New Labour’s “Stakeholder Society” and not popular capitalism at all. How much better our economy and society would have been if those who created popular capitalism had not also killed it.

    1. stred
      January 21, 2012

      Well Said.

  14. sm
    January 21, 2012

    Popular capitalism- that implies it must work in the interests of some group or groups to be popular. We have capitalism for some (99%) but not for others (1%).

    Capitalism is not working – where is the level playing field competition , reasonable lack of barriers to entry, transparency, price discovery.

    Can people afford to run a car, catch a plane, pay for medicines (not Scotland) or pay TV tax or other such things? I notice we didnt talk about essentials, energy, food,water , rent prices or house prices or jobs that a popular capitalistic economy must deliver or fail.

    I just question the idea that we have popular capitalism anywhere at present. The banks,politicians, regulators etc all looked after themselves and guess what happened.

    What happens to all those EU/MEP pensions if the EU collapses or the paymasters leave? (Not that i am unduly worried for them, but i fear they may be protecting themselves rather like those in banking like you know who, what are we doing to prevent this.)

    Someone invented the term Zombie capitalism, the living dead kept alive to feed off the people.

    The coalition say they are cutting and restructuring as they QE/ZIRP and inflate.
    The Germans are insisting on cuts and restructuring before any question of official QE/ZIRP to inflate. Maybe they are both waiting to see the white eyes of inflation/deflation respectively.

    The collapse will come when its realized there is no more public money or austerity to fund the bad decisions and maybe capitalism will be allowed to resolve those. Many a racy dark horse will have bolted leaving the taxpaying compliant but increasingly stubborn donkey behind.

  15. forthurst
    January 21, 2012

    Capitalism is in disrepute because of the activities of banksters, corporatists, and venal politicians. In the mind of the public, these groups represent Capitalism in a way that the designers and manufacturers of their latest gizmo do not. The public would find it far easier to except that the aforementioned banksters were perverters of Capitalism, rather than exemplars, if they saw significant numbers of them suffer substantial losses of undeserved wealth and undeserved liberty. In fact it is rather hard to see how the economic damage inflicted on the rest of us has led to any sea change in the way these groups intend to operate in future.

    Recently we have had Cadbury, Southern Cross, and now Peacocks. The first was a successful business from whom the Treasury could look forward to bounty for many years to come but which was instead mortgaged to a (US foods and -ed) cheese company by the publicly owned RBS. The second company was the victim of a (an investor-ed) who once again used financial engineering to take over a successful and useful business in order to hoover out all the equity and more, causing it to ultimately fail. Peacocks was a business trading profitably but once again unable to sustain the debt burden with which another (owner-ed) had encumbered it. What action does the government intend to take to ensure that the debt burdens of companies is undertaken by the stock market and not by publicly owned and other banks in order to facilitate spivery and bonuses for bank officials which are detrimental to all parties not directly involved in the transactions?

    Although the Stock market should be the mechanism for the expansion of the economy and the creation and sharing of the wealth creation process, it has become far too much a vehicle for short term enrichment through manipulation by banksters. Why does the government believe that an investor in businesses that add value and create wealth, should have to compete in the market with computer programs plugged directly into the exchange? Why should he be prevented from trading at a fair price because significant amount of stock has been ‘borrowed’ and sold in order to depress (rig) the market?

    The only way to ensure that Capitalism is successful is to stigmatise, criminalise and imprison those who wish to pervert it. A system under which the public underwrite the losses incurred by reckless, egregious behaviour should never be acceptable because it will undermine the benefits of a fair and orderly sytem.

    1. forthurst
      January 21, 2012

      Gideon Osborne has used the expression, “the Hedge Fund industry”; is that an oxymoron? Why has the Conservative government elevated to the peerage rather more people associated with finance than with wealth creation from productive industry? Do the former category have more largesse to bestow or does the latter category have too little time to surrender?

    2. outsider
      January 21, 2012

      Great analysis. Totally agree.

  16. Dennis
    January 21, 2012

    ‘There is choice, so you do not have to have the less good service. And there is a faster way of removing the shoddy and the poor performer. As customers go elsewhere so the business that is poor has to contract or die.’

    Too true there is choice and the ability to exercise it has never been greater thanks to the power of the internet and regulatory changes. The problem is, people in general appear to be reluctant to exercise that choice particularly when it comes to banks. The service from the big banks has been shoddy for decades. I have moved twice (many years ago) and all my personal banking has been with a Building Society for many years whose service has never been less than good. If I need a financial service it does not provide (such as share dealing) it is easily obtained elsewhere online. With internet banking there is litte need for a very local branch.

    If say (Big
    bank-ed) customers moved their accounts en masse in protest at bonuses (Big bank’s boss-ed) would not be looking so smug. Regulatory changes have made it more difficult for a bank to obstruct a customer trying to move. They do not have to use the big banks since there are other smaller banks and Building Societies provide the services that most people would need.

    So there are howls of protest from the public demanding action but unfortunately they are too apathetic to do anything about it themselves. Collectively they have immense power but they won’t use it.

    The exertion of people power could change the attitude of banks virtually overnight and really popularise capitalism. But how do you get people to be proactive and harness the power of capitalism that is available to them?

  17. Electro-Kevin
    January 21, 2012

    Until 2007 bankers’ bonuses weren’t an issue. The financial sector had worked their magic in favour of Gordon Brown and Tony Blair’s permanently levitating economy.

    What went wrong with capitalism wasn’t really a failure of capitalism. It was when socialism intervened in it in the form of Bill Clinton in the US and Tony Blair in the UK. This caused a property bubble and the markets to inflate with funny money.

    The only way to restore capitalism is to tackle socialism.

    So when are the Tories going to start ?

    1. Bob
      January 21, 2012

      Bring back Tony Blair.
      He earned 12 million last year, and instead of paying the new higher rate of 50% he managed to get away with (a lower rate-ed).

      Sing along now, “things can only get better”, come on uanime5 sing up!

    2. stred
      January 21, 2012

      The rot started in the 80s, when the lobbyists and management course ethics came over from the US. Since then, they have taken control of the whole system. I worry whether the so called C0nservative Right have realised this fact.

      1. Electro-Kevin
        January 22, 2012

        Stred – My erstwile-banker colleagues (now collecting tickets on trains with their professional degrees and acres of traditional banking CVs) confirm totally what you say.

        This combined with loose lending is wot dunnit.

        Bob – Clearly Tony Blair wields more clout than ever. He has the luck of Bielzibub himself.

  18. sm
    January 21, 2012

    Suggestions could also would include
    1) reduce your own debts particularly if interest rates are above inflation.
    2)reduce your useage of credit cards and use debit cards.
    3)use cash

    the problem is 97% of all money created is debt-money, its harder to transfer a debt to another lender but why shouldn’t this be made easier? The individual probably has less effect than business.

    If a well capitalized new entrants were suitably encouraged – by the state not subsidizing the incumbents and perhaps for ‘cleanskin’ new entrants a QE funded grant for a share capital (repayable) purposes.

    1. Bazman
      January 21, 2012

      Get yourself debt free. There ain’t no better advice. What would the country look like then with everyone telling employers to ram it?

  19. Matt
    January 21, 2012

    Capitalism has provided tvs, phones and fridges for many? I’d question that on a worldwide basis for a start but also remember capitalism has also planted in your mind the ideas that these consumer items are what we all want. You and I do very well out of the western take in capitalism. Whether the majority of people are happy within it is difficult to measure but you and I try to make sure nothing else comes along to threaten our wealth that is pretty secure within the current economic system.

    1. Bazman
      January 21, 2012

      Billions of people have never even used a telephone. Bill Gates can ram it. Even Bill Gates agrees with this.

  20. lola
    January 21, 2012

    The challenge today is to create a capitalism people are proud of and wish to work within . No. Capitailism is the most moral and fair system to evolve. It’s evolutionary, it’s not an ism. Politicians (and their attendant capricious bureaucrats) cannot ‘create’ capitalism any more than they can create life. What they can, and have been doing, do is get in its way. Even worse they have been distorting capitalism into cronyism, especially under new labour. Stop all that vanity in thinking you can ‘create capitalism’ and stop distorting it with cronyism. We, the people, will work out the rest.

  21. Reaguns
    January 21, 2012

    Can anyone tell me, what does John mean by homesteading in this case?

    Reply: Taking on an empty home in poor condition and making it your own , putting your own effort into increasing its value.

  22. Bazman
    January 21, 2012

    Whatever happened to the glory of capitalism? Fred the shred will die in shame for sure. He’s not bothered as he is an idiot. Yes he is! Living like a Tsar last time I heard… Who would not die glorious to secure a cure for malaria and to defeat fat cĀ£4ts. Which to defend the often flawed ideology of Bill Gates and Warren Buffet is what they are trying to do.

  23. Remington Norman
    January 22, 2012

    Part of the populist disaffection with capitalism is the perception that retail shareholders are powerless. They have no meaningful say in the conduct of companies and are thus effectively dis-enfranchised on issues such as remuneration. Those who bother to follow markets see institutional investors as close to companies, insiders, if you will, and part of the problem not the solution. Putting retail shareholders on boards as a matter of right would do much to bring companies closer to their investor base.

  24. Barbara Stevens
    January 22, 2012

    Capitalism takes many avenues, its how it’s operated that makes it successful. What we have all seen is ‘greed’ manifest it’s self and become almost the norm. These odd few have destroyed the meaning of Capitalism, and taken away the true meaning of it. We cannot live without it, it’s part of each nations prosperity, even Russia now embraces it, and China in some form. What we need to do is to have clear boundaries set, the right and wrong of Capitalism and the consequences of what greed can do to nations. We have seen this in 2008, the greed of the few nearly destroyed nations, and cost them dearly. We have all had to pay the price for their greed, and the poorest have paid the most cost. The latter cannot escape like the rich can. Capitalism is OK, if it’s monitored, as laws in place to protect the likes of us all, and those who create the crisises pay the full cost as well. Not rewarded with knighthoods, and large leaving bonuses, but are made to see the inpact their actions have brought about. Until we do this, greed will always be there and a tempataion. The main point of my arguement is, how long will the poorer of us stand for the greed and them getting away with it. At sometime they will react, and how we don’t really know how. A fair society is what all of us want with responsiblity; it should be more acceptable at the top as these people are well paid for what they do, and we assume the most intelligent. The bottom should learn from the top, and from what happened in 2008, we can see from the riots of 2011, they are saying if they can get away with it, so can we. Who are we to judge?

  25. Conrad Jones (Cheam)
    January 22, 2012

    Go into any retail outlet and look at the label – read the bit that says where it’s made.

    How much of the price tag actually gets back to the people who actually make the stuff ?

    How many items are made half way around the planet, then shipped over to the UK – using Oil; creating unemployment in this Country because – “our workers are too greedy?”.

    Many excellent firms in the UK have been transferring all their manufacturing plants to India, China and other Countries where costs are allegedly cheaper.

    Manufacturers should have the freedom to offshore their production – as a last resort if pay demands are excessive; but this seems to be a long standing Trend which wastes Oil (Transporting “Cheap” goods many thousands of miles), exploits poor workers rights, encourages child labour forces and damages some Third World Countries local industries by extracting all profits back to the Controlling Company’s Country.

    This Trend of offshoring is forced upon many Companies due to a lack of money in the system. People want high quality goods and services, but if they don’t have the money available (due to excessive mortgage payments) they will look for the cheapest offers.

    Many shops have closed down and been replaced with cheap Pound shop type outlets. I’ve noticed a growing Trend that once good quality Shops have been turned into fly-by-night “Closing Down Sale” Shops where “everything must go”, “75% off”.

    Banks are being forced to increase their “Capital Reserves” – Why?
    Because it’s seen as Politically expedient to do so, never mind the practicalities of demanding that Banks reduce Lending thereby starving the economy of needed money, while at the same time the Government sees fit to enforce Austerity Measures to cut public spending, which cuts Government Lending. This puts the other nail in the coffin of our economy because it starves the private sector of credit and also reduces Government created debt money. Money Supplies Shrinks.

    It seems to me that the Government does not understand where money comes from.

    Before we sing the prasies of cheap goods (which we in the UK do benfit from) we should also look at the consequences and true costs and also look at the reasons why outsourcing (at the expense of UK employment) has increased.

    Before a government can create policies that are not detrimental to the Economy’s well being, they should – at least; attempt to understand what money is and not be lead by Economists who seem to think that Banks and Building Societies just lend other peoples money. They don’t. They create Money when they Lend.

    I would recommend they read a Book on how money is created, an example would be the following by the New Economic Foundation:
    http://www.positivemoney.org.uk/where-does-money-come-from-book/

    If David Cameron had read this Book – he wouldn’t have made a comment about us paying off our credit card bills. If he had bothered to speak to Mervyn King – before making this rediculous comment, he would have realised that if everyone paid off their debts, WE WOULD HAVE NO MONEY – AND WE’D STILL OWE BANKS MONEY.

    Steve Baker MP has also made some excellent speeches on the subject of money creation and how it affects the economy.
    http://www.positivemoney.org.uk/2011/12/steve-baker-mp-brilliant-speech/

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