Wanted: a new form of capitalism

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…

UPDATE: You can read Nick Clegg’s speech in full here, which includes this:

Why is our capitalism in crisis? I will argue that this is, at root, a crisis of power.

That we now have an economy driven by immensely powerful vested interests. Interests that politicians have abjectly failed to stand up to.

The remedy, put most simply, is a redistribution of power. Last month I set out my vision for an Open Society and I talked about the need to disperse political power to create strong citizens. Today I want to talk about dispersing economic power to that same end…

Liberals believe strongly in the virtues of the market. But only if it is a market for the many, not a market for the few. Our economy is in danger of becoming the latter, monopolised by a minority, serving narrow and sectional interests.