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How do you run the country five years after the old business model died?

a man pushing over the word "crisis"Big Business remains in a state of denial. After the biggest crash for a century, their line is unaltered: low taxes (or preferably no taxes through avoidance), deregulation, privatisation to remove virtually the entire domain of the State into the private sector, unrestrained inequality. It’s as though the trauma of the last 30 years hadn’t happened – unemployment nearly 4 times higher than in the pre-1980 period, growth of output and income per head down, manufacturing hollowed out, investment and R&D falling, rising balance of payments crises, and much more frequent and severe financial instabilities.

It is said that the first sign of insanity is to keep on doing the same thing but expect a different result. Clearly neoclassical economics has run into the buffers, and the only thing that prevents us burying it is the lack of an alternative better-grounded model. The good news is that this is beginning to germinate. The best economics now has a much more sophisticated understanding of what drives innovation, investment, productivity and growth than the old model’s reliance on low tax and deregulated markets.

The old, discredited model fails to be alert to the latest understanding of of the complexity of how economies and societies create and assimilate paradigm-changing technologies. The new model, whilst dispensing with the extractive, value-exploiting capitalism whose ruins lie all around us these last 5 years, needs to express much wider and more profound values and criteria than neoliberal capitalism’s obsessive focus on money-making to the exclusion of all other considerations. The new model recognises that the quality of a country’s wider institutions from company organisation to accountability of government are crucial in building an inclusive and value-creating economy. The governance of the economy has to be shaped to allow multiple new ideas and projects, arrays of experimentation and an inbuilt drive to take and absorb risks to find full expression.

The issues that confront us are daunting. How to construct a financial system that has soundness and integrity? How to ensure government effectively takes the risk of investing in frontier technologies that the private sector does not and cannot adopt alone? How to prevent economic and political institutions from falling into the hands of one party or one self-interested group of oligarchs who simply concentrate on extracting value rather than creating it? How to stop companies being overrun greedy, self-obsessed, over-paid boards? How to ensure that the creative genius of the workforce is fully and regularly tapped within a workplace that is constantly alive to new ideas and procedures? How to reverse extreme levels of inequality which even the IMF and OECD have recognised stunt the vigour of societies? And how to make government genuinely responsive to the will of the electorate rather than a facade in which all the big decisions are fixed and predetermined in the hands of an unrepresentative elite?

One Comment

  1. Robert says:

    Business will do what ever it takes to make money, tax avoidance if a problem is the problem of the government and the tax regimes.

    The fact is the Tories are the Tories the master of big business, sadly these days labour wants to be the Tories. the fact is voting at the next election will not alter to much we will have people avoiding tax and governments allowing it.

    But I’m sure welfare will be blamed .

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