On Monday, Nick Clegg gave a speech on responsible capitalism. This was his first real foray into the debate since it has erupted as a major talking point, even though we as a party have been arguing the need to reform capitalism before it was cool.
Before criticising capitalism, he praised it by saying this:
Capitalism may be today’s political punchbag, but let’s take a long view: it’s one of history’s great success stories. No other human innovation has driven progress and raised living standards so consistently. Markets catalyse ideas, invention and experimentation. When they work well, they are meritocratic and liberating. And they generate the wealth to support the most vulnerable and needy in society.
Capitalism, a great success story! Really Nick? Are we talking about the same capitalism? The capitalism that so often exploited the poor to fill the pockets of the elite? The capitalism that exploited the poor so much that Labour had to introduce a minimum wage in order to help the most vulnerable and needy in society? The capitalism that created a healthcare system which leaves so many Americans without health insurance because they can’t afford it?
Nick argues that the problem isn’t too much capitalism but that too few people have capital. Whilst in some cases that might be a problem, some of the biggest successes in capitalism have come from positions where getting capital was incredibly hard.
Mainstream opinion says you need three things in order to be successful in a capitalist system: large sums of money, the greatest minds in a particular field and a market to sell into.
Let me give you an example.
Back in the early 20th century everybody was trying to create the first controlled powered flight, one of them was Samuel Pierpont Langley. He was given $50,000 to figure out how to achieve a controlled flying machine, money was no object. He was well connected and hired the best minds of the day. The market conditions were perfect, the New York Times followed him around. Everyone was rooting for him to succeed.
Yet, we’ve not heard of Samuel Pierpont Langley. Why? Because the Wright brothers got there first. What did the Wright brothers have? Nothing, they had no capital, they used the proceeds from their shop to fund their dream. The proceeds from the shop was peanuts compared to the capital that Pierpont Langley had access to. No one on the team had a college education, not even the Wright brothers and nobody followed them around.
How did they do it? They believed in what they were doing. They believed if they could work out how to do this flying thing, they could change the world. Everyone who worked for them, believed in this too so they gave their blood, sweat and tears.
Samuel Pierpont Langley was doing it for the fame and the fortune. He quit when he found out the Wright brothers had achieved what he was trying to achieve.
Look around the world today, what is everyone looking for today? Is it to change society, to make society better or are they in pursuit of the fame and fortune?
I think when people talk about the good qualities of capitalism like innovation and experimentation; they aren’t talking about capitalism but are talking about a political system that allows human creativity to flourish. A political system that oppresses, a society that oppresses and sometimes people’s own fears stop creativity, stops experimentation, stops innovation.
We have approximately 3 million people unemployed in this country. That is 3 million minds going to waste, 3 million minds that could be innovating, sitting at home twiddling their thumbs and learning how not to be innovative. 3 million minds looking for jobs instead of innovating, creating businesses and creating jobs.
Capital and markets will never be as important as people. We never hear human capital stressed enough when it comes to the economy.
Human capital is why an open liberal society is so important because it allows people to be creative, free from excessive state interference, free from rigid societal structures, free to be creative, innovative and successful.
* Nicola Prigg is a member from Ayrshire and Arran who is standing for Ayr West in South Ayrshire in May. She blogs at priggy.wordpress.com