Friday, July 28, 2017

On enlightened capitalism:

Last week Scottish Conservative Leader Ruth Davidson MSP published a most thought-provoking and excellent article on the "Unherd" site which was titled:

"Ctrl + alt + del Conservatives must reboot capitalism."

This article was well worth a read and anyone who has not done so can find it here."

It was a very wide ranging piece which began by pointing out some of the massive benefits which the market economy has brought to greatly improve millions of people's lives, but went on to point out that, particularly in the past decade, those benefits have not always been visible or evenly spread and that for some people. as she put it,

"market failure piled upon social failure piled upon political failure "

have left them with poor options and no stake in the system. It is hardly surprising that many such people have turned to the siren voices of populists of right or left who reinforced their feelings that "the system" is stacked against them, offering instead what sound like simple and clear-cut remedies.

As Ruth wrote in that article,

"How does a teenager living in a pit town with no pit, a steel town with no steel or a factory town where the factory closed its doors a decade ago or more, see capitalism working for them?

Is the route for social advancement a degree, student debt, moving to London to spend more than half their take home pay on a room in a shared flat in Zone 6 and half of what’s left commuting to their stagnant-wage job every day; knowing there is precisely zero chance of saving enough to ever own their own front door?

Or is it staying put in a community that feels like it’s being hollowed out from the inside; schoolfriends moving away for work, library and post office closures and a high street marked by the repetitive studding of charity shop, pub, bookies and empty lot – all the while watching the Rich Kids of Instagram on Channel 4 and footballers being bought and sold for more than the entire economy of a third world nation on Sky Sports News?

Not a single person familiar with this impossible choice should be surprised at the rise of the populist right and left, of Donald Trump and Jeremy Corbyn, with their simple, stick-it-to-the-broken-system narrative."

Ruth goes on to write about some of the solutions we need to consider - fixing the housing market (a policy, please note, which is likely to require less government intervention rather than more), reforms of corporate governance, restrictions on tax avoidance, lowering barriers of entry to market competitors and reforms to education are among the things she touches on.

But it is also necessary to foster the ethos of responsible capitalism. The most successful and effective business leaders in today's world are rarely the "robber baron" type of capitalist but those who use their economic power in positive ways. And even those companies which have come in for criticism - much of it justified - may have got other things right which we can learn from.

This week she has also linked to an another article on the Unherd site, this-one by Chris Deerin, which calls out examples of good business practice of the kind which can lead us towards a model of good corporate practice. It's a moderately long read - thirteen pages - but worth the effort.

The idea of ethical capitalism has been someone discredited both because some of those who promoted it were naïve idealists and because some companies who should have known better have been caught out in very unethical capitalism.

It is time to revive it.

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