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Do we want predatory capitalism or an economy geared to the common good?

Vulture feedingDespite the predictable whines of some FTSE-100 bosses reported yesterday about a post-election Labour-SNP pact, Ed M should flesh out more about his vision to replace ‘predatory capitalism’ both because that is what a majority of people want and also to put paid to the ignorant mantra that self-interested executives like to propagate that anyone who says business practices could be improved is somehow ‘anti-business’. The real truth is that theself-interested executives are anti-public interest.

Britain has some world-class industries and many thrusting, innovative small businesses, but our economic performance is still marred in places by exploitation (the energy sector), failure to meet need (house-building), lack of investment (utilities), short-termism (City of London), profit-driven misconduct (Big 4 banks), as well as by dysfunctional structure (lack of stakeholder commitment) and perverse ideology (the market über alles). So what should be done?

Just 30 years ago Britain’s greatest industrial companies were the chemicals giant ICI and the electronics conglomerate GEC, but now, under relentless pressure to deliver high short-term profits and lacking owners committed increasing long-term value and market share, both have disappeared. Their German rivals, BASF and Siemens, driven by long-term investors, have grown hugely and flourished. Britain has become the sell-off industrial marketplace of the world: in the last decade a staggering £440bn worth of British companies have been sold off overseas. Britain now has no indigenous quoted companies in the car, chemicals, glass, industrial gases, industrial services and building materials industries, among several others. The stock market is worse: it is now hardly organised at all to provide risk capital to expanding companies, but rather is the casino play-pen for hedge funds, high-frequency traders and investment banks trading their own accounts. No less than 40% of the shares of British companies are now held overseas, typically by a global asset-management group.

Britain needs a new industrial architecture in which many types of ownership can flourish – mutuals should be better protected, forms of employee share ownership promoted, and a template created for public-benefit companies (from the media to utilities) which in exchange for an explicit declaration of public purpose can expect reciprocal privileges. Where companies are natural monopolies there is a strong case for public ownership. The laissez faire doctrine of ‘leave it all to the markets and government get out of the way’ must be relentlessly challenged: it’s not only wrong, but has been proven to be utterly counter-productive. It has led not only to the colossal financial crash in 2008-9 caused by the banks, but also to the destruction of much of Britain’s industrial base, initiated by Thatcher and leading inexorably to persistently low industrial investment, a weak R&D record, and the the worst balance of payments deficit in the country’s history.

Contrary to neo-liberal doctrines, all the innovative technologies that have changed the world in the last 300 years have been in one way or another triggered by the State, with entrepreneurs and companies following in the back-wash. The risk and financial consequences of potential failure is beyond any one venture capitalist or company, hence contrary to the avalanche of praise for individual risk-taking, in reality business and banks don’t take much risk. We need a new and more accurate vision of the State as the real player in the job of frontier, game-changing innovation.

3 Comments

  1. Barry Ewart says:

    Yes it it is the labour of the working billions which creates the wealth and makes societies work.
    But particularly Big Business fails to understand we are not here to serve them; they are here to serve us.
    They have the economic power (expropriated), they control the media, and we there may be too many uncritical subservient politicians who when told to jump say, HOW HIGH?
    But we as working people globaly really have the power in our hands and brains which our forefathers and foremothers and Labour’s history reminds us.

    1. Robert says:

      No we do not have the power in our hands because Government have the guns, while Government can march shoot and demand we have sod all power.

      Sadly labour Tory, both are basically about power Cameron is unless and Miliband god help us all.

      Progress have put out a pamphlet now about labour as a movement, if we are not a movement we are nothing , this from the right wing Blair-rite shambled and that is the problem. We are now in labour willing to be seen as Tory lite

  2. David Pavett says:

    I am in sympathy with Michael Meacher’s case here. But I wonder on what he bases the claim that “all the innovative technologies that have changed the world in the last 300 years have been in one way or another triggered by the State, with entrepreneurs and companies following in the back-wash”. The state has been more active and more innovative than widespread conceptions will allow but is this not a claim too far? How, for example, would one justify such a claim with respect to the development of refridgeration since the 18th century?

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