Look through the grand sweep of history and times of severe economic turmoil have often been accompanied by times of ideological ferment. That ferment has often thrown up the extreme and the nasty – think fascism or Communist dictatorship – which makes the absence of an equivalent post-financial crash ferment not wholly a bad thing. Yet so far there is very little sign of the sort of ideologically coherent new approach to economics that we have seen in similar previous periods.
The Occupy moment symbolises that absence wonderfully – for it too does not offer solutions, it offers a process for debate as its key figures have forcefully pointed out when interviewed in the media about what their answers are. A process which, so far however, has thrown up no new answers. Keynesian thoughts may certainly be in vogue, but they are hardly new – and you do not have to be much of a cynic to note how their popularity is closely linked to whether Keynsianism can be interpreted as “spend more” rather “spend less” and a popularity which frequently neglects his views on the role of government in providing services.
Yet somewhere in amongst the varied political rhetoric from the established parties is an approach to reforming and taming capitalist excesses struggling to get out. It is rarely eloquently expressed as a coherent whole and it frequently is little more than a shopping list of disparate ‘make the rich pay’ policies.
Nick Clegg’s speech yesterday was an attempt to step beyond the politics of the shopping list. Against the ambitious criteria of providing a coherent new ideological approach, it is no criticism to say that it did not succeed. But it did throw in a few useful ingredients, many revived from old Liberal Party concerns.
Taken with other recent comments of his, Clegg’s form of capitalism is a greener one – witness the creation of the Green Investment Bank. An institution to make the economy greeener, but a market-based one – indeed a bank.
Clegg’s form of capitalism is also one with a fairer tax and pay system – income tax cuts across the board, heavier taxes on wealth, action on bank bonsues and executive pay.
Clegg’s form of capitalism is one where more power rests with individuals – power for employees in the workplace, more mutuals and co-operative purchasing.
Yet Clegg’s form of capitalism is – even more than the party’s overall message – one in search of a clear narrative. The “John Lewis” line played well, especially to middle class journalists who mediate a politician’s message. It plays well to those who shop at John Lewis and know how it manages to both offer good quality, decent prices and excellent customer service. Not the cheapest, but factor in quality and durability and its goods are often the most value for money. Just the sort of focus on more than simply the price tag which is needed in public services.
But “we want the world to be like John Lewis” is not enough of an answer to what a modern, liberal democrat form of capitalism looks like. It gives little of an answer as to how to structure financial markets for a start. Not a bad hook for one speech but not in itself the foundations for the long-term heavy intellectual lifting required.
The opportunity is there to be more ambitious in laying out what a liberal democrat form of capitalism should look like. It is one the party should take. One where elites don’t demand free markets for others but protection for themselves; where the lucky few demand others should go bust but they should be bailed out; where others have their pay cut in the name of efficiency but the elite insist their pay must go up in the name of staff retention.
Market forces for the few, not just for the many perhaps…
* Mark Pack is Party President and is the editor of Liberal Democrat Newswire.
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12 Comments
Fantastic – I am the sites 1,0000000 ‘th visitor AGAIN. Just like I was yesterday. So, so lucky.
Wanted: Capitalism.
Yours,
Fed up of Crony Corporatism
Needs to be asserted, perhaps a little more, that because social conservatives have been allowed to frame ‘capitalism’ as theirs, we have a semi-system that is weighted towards elites and established business.
Look at me, arguing for a differentiation strategy!
“Clegg’s form of capitalism is also one with a fairer tax and pay system – income tax cuts across the board, heavier taxes on wealth…”
Georgism, by any other name.
‘Bout time!
isn’t this called ‘pluralist capitalism’?
And it’s achieved by having open markets, not all free markets and not no markets.
Mark,
You call for a new form of capitalism. Let me propose liberal universal inheritance capitalism.
As things are, some inherit billions while others inherit nothing. Instead of this staggering inequality of opportunity in each succeeding generation, UK Universal Inheritance is the proposal that every UK-born UK citizen on their 25th birthday should receive a basic minimum inheritance, financed by reform of Inheritance Tax. It could be introduced gradually, at £2,000 in the first year up to £10,000 in the fifth year and hopefully more thereafter, up to a level at least equal to three years university tuition fees.
Given that the average wealth of every adult and child in the UK is about £100,000, these amounts could be financed by a 10% Capital Donor Tax on all giving and bequeathing (retaining 40% for giving to non-UK tax payers) , with abolition of major unlimited exemptions for lifetime gifts and bequests of agricultural, business and shareholding assets, in tandem with and deductible from a progressive cumulative Lifetime Unearned Capital Tax from 10% up to 40%.
Rates and amounts could be set to cover the loss to current annual revenue of £3 billion from the existing Inheritance Tax. Moreover this would be partly offset by a reduced need for and cost of the income welfare state as a result of the introduction of what would be in effect an asset welfare state as well.
The proposal has a history. Thomas Paine first broadly suggested the germ of it in 1797 in a leaflet entitled “Agrarian Justice” to compensate for the feudal land grab. Without having heard of that, I wrote “Inheritance for All” in the Liberal Party “New Outlook” magazine in 1976, after standing as a LIberal in Newbury on a platform of greater equality of opportunity in education, health and the inheritance of wealth, either side of my finals in PPE at Oxford. I formed the Campaign for Universal Inheritance in 1997. The Fabian Society came out with “A Capital Idea” in 2,000, mentioning Thomas Paine’s proposal of £15 for all 21 year olds. The continuation Liberal Party – not the Liberal Democrats – adopted UK Universal Inheritance as party policy in 2005.
This alternative political ideology, of liberal universal inheritance capitalism with a fairer start in a market economy in each new generation, should replace the old widely but often unconsciously held conservative political ideology of dynastic capitalism – a hangover from feudalism – and so reduce the vast inequalities of undeserved wealth.
In so doing it will give a jump start in life for all in each new generation. It will reduce alienation, financial and social exclusion and young adult poverty and will increase educational, entrepreneurial, home ownership and other opportunity for all in each new generation.
Moreover, at this difficult time, it will transfer a proportion of unearned spending power from the about to be wealthy to young adults all round our country, including Scotland, Wales and Northern Ireland. It would boost the economy and reduce austerity without increasing the government’s deficit.”
The approach needs to address the vastly expanded power of the few over the many shown by the excessive power of credit rating agencies and the over-cosy relationship between big business and government. In this context, here is an unwelcome message for the left, to which I belong: one way of reducing these powers is to borrow less long-term. Also it seems to me that the borrowing like many other things is based on an assumption of continued long-term economic growth. How justifiable is that assumption through the 21st century?
@Mark Pack – To read your piece, anyone would think that no-one in the party had given this question any thought until Nick Clegg’s speech. Why agonise over the need for a new form of capitalism when a coherent alternative has already been supplied by David Boyle and Bernard Greaves in their ALDC booklet, ‘The Theory and Practice of Community Economics’?
Incidentally, re my previous post,, the UK Universal Inheritance amount itself would be subject to the progressive cumulative LIfetime Unearned Capital Tax, and so would be clawed back in due course from recipients of larger lifetime totals of unearned gifted and inherited capital.
Wanted: a new form of capitalism
It is a great contribution, Mark, to Liberal thourght. Thank you.
I trust that this ‘new’ stuff is not condemned to evaporate with the new day sun.
I would take more notice of this as a genuine contribution if there was an invitation to pin down the parts that people disagreed with and to put their own take on the individual parts – a sort of exercise in producing an organically grown document perhaps.
Ah well…
James: Well, that is one of the reason for having comment threads, so comment away… 🙂
We had democratic socialism until that collapsed in 1979. Then the pendulum swung to neoliberalism and the elevation of markets to god-like status. The Tories couldn’t make it work so New Labour had a go. They couldn’t make it work either so the Tories are having another go although the electorate is plainly unconvinced.
Now the Tories’ second attempt at neoliberalism is collapsing, destroyed by its internal contradictions, financial bubbles and cronyism.
So, I thoroughly agree with Mark’s thesis that we need a new form of capitalism. A liberal one would be good but as of now doesn’t exist so Clegg and Co have adopted the Tory version even though it’s on its deathbed while the majority of the party gets increasingly restless and the voters desert.
Some heavy lifting still to do I think.