A bonfire of capitalists? With a government this big, we never stood a chance
'Capitalism is dead!' comes the cry. The problem is that we have never truly had it
In these dark days of winter with the cold finally hitting the UK in both meteorological terms as well as financial, there has been a lot of chatter about how we are seeing the death of capitalism.
If we had capitalism that may have been true. Unfortunately, and accelerated by thirteen years of a Labour government, what we have seen is a corporatist mixed economy that is skewed in favour of state-interference and where bank risks get nationalised.
True capitalism has never really been tried in this country. Even at the beginning of the industrial revolution, the factory owner took the part of the landlord, the new money granting favours on the workforce – this wasn’t capitalism, it was a form of feudalism.
Regulation, be it national or supranational, has seen officials conspire to act as a break on western economies especially in Europe. Take the common market/single market. What was meant to be a way of allowing producers to sell their goods, products and services across the continent unimpeded by tariffs and protectionism, morphed into a regulatory weight which added costs, time and effort to producers and consumers alike. Instead of allowing easier transit of goods, it somehow managed to add layers of regulation in the ill-advised goal of uniformity even if a product was only designed for domestic use. In fact I am still surprised that we are still allowed our three-pin plug in the UK.
As a result we have seen the rise of China and India which are not hindered by unnecessary additional costs, allowing them to compete far more efficiently – in effect the EU has shot business in the foot. Instead of concentrating outwards to the world, the EU seems to be looking inwards at itself, not able to adjust to how the world as changed, not able to see that less regulations could mean less costs, less burdens and a more efficient, competitive business world.
Now I know what some people are going to say; “lack of regulation put us into this financial mess”.
But it didn’t. A lack of supervision did that. A lack of perspective on the risk factors involved in sub-prime mortgages did that. A lack of foresight that all good times come to an end did that to governments who thought they could keep borrowing and spending forever.
A democratic capitalist world should have minimal regulation but maximum supervision . It doesn’t matter what regulations are in place if there is no proper supervision as we have seen be it gun laws, social services or indeed the financial sector.
“But”, I hear you cry, “without regulation, companies will just pollute and kill the planet, people, animals etc”.
Maybe in the past this was the case. But we now live in a world where a typo on twitter can turn Ed Miliband into a twatter in a blink of an eye. A western company that kills its customers, pollutes the environment or kills its workers would soon lose customers and in any case should be convicted under criminal law. A company that ripped off its customers would soon lose business - the interference of government has allowed utility companies to deny choice to customers and create, in essence, a monopoly where a small cut in gas prices is hailed when, in effect, it is still a price rise from the previous year.
True capitalism would bring power to the consumer not the producer. The current regulation-heavy environment prevents smaller companies from entering and offering the choice that is essential to bring power to you, the consumer.
If the west was a true capitalist world then, in theory, shareholder activism would be higher. If you were the boss of a company that has actually seen a five percent fall in profits, well you certainly would see your rewards adjusted as a result. The current pay remuneration cartels would probably not exist as shareholders and consumers alike would have the power to hit you where it hurts – your pocket.
If we had a capitalist, not corporate, society then RBS and Northern Rock would have gone to the wall. Bad luck bankers; you took the risk and you failed. Lloyds would be far healthier than it is now - by not having to pick up the corpse of HBOS – and we would have had a sensible, if traumatic, readjustment in the economy that would happen naturally in a capitalist world instead of this dragging ever-downward spiral that is being inflicted on most of the west.
The role of government should be to enable its citizens, not drag them down and the same applies to its businesses. A smaller, more accountable government, one that catches those unfortunate citizens that fall through the net and picks them up again and enables business and people to thrive with minimum interference and taxation should be the goal of all right-thinking politicians.
The problem is that politicians and officials need a reason to exist hence greater interference which brings the western economies down. Interference creates an entitlement culture against a backdrop where ever-increasingly ageing populations bring their own demographic and economic pressures. Interference removes the power of the individual and communities to choose what is best for their circumstances. Interference tells you what rights you have rather than what responsibilities and freedoms you have. Interference has seen the US now look for a $16.4trn ceiling in its borrowing and drags down Europe’s share in the global economy. Interference creates trade barriers and restricts economic growth in developing countries which in turn places immigration pressures on other countries as people naturally seek a better life.
We have never seen true capitalism and I doubt we ever will but if we are to survive the upcoming economic winter then could we please see politicians not act. Seriously, no more regulations, no more complications in the tax regimes, just butt out. And while we are at it whatever did happen to the bonfire of quangos and no new laws without the repeal of an old one, Cameron?
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