David Cameron’s speech was the best of the three party leaders’ discussions of what kind of capitalism we want in the future. 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 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 and bank collapse. We wish now to ensure that some future large bank cannot go down and end up with massive taxpayer subsidy. This government has adopted the ideas of living wills and controlled administration 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? 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 those 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 dealing 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?