Responsible capitalism: a Socialist perspective
Responsible capitalism is an attractive idea in troubled times. It has the air of offering an appropriately serious minded response to the financial crisis and the irresponsible behaviour of bankers. It seems to promise a capitalism that will lead to a banking system which works for the many, not just the few, and which does not engage in the practices which led to our current economic crisis. It suggests a capitalism which treats the Earth’s resources as valuable and finite and which rightly regards inequality as iniquitous and poverty as an evil which diminishes us all. Responsible capitalism even has the pleasing implication of recognising and even tacitly apologising for previous irresponsibility, whether this be the behaviour of bankers or political elites which turned a blind eye to bad practice or enabled it through rampant deregulation or their toleration of the ‘filthy rich’ and growing inequality.
Sadly responsible capitalism doesn’t really mean any of these things, at least not yet. At worst it is an empty phrase designed to distract attention from the fact that very little has changed in how we run our economies; at best we are witnessing the beginnings of a set of ideas which may lead to real change. Responsible capitalism – or language similar to it – is currently in vogue for the very good reason that capitalism as practiced has clearly got us into a fix, those responsible are rightly unpopular, and there is the strong sense that something must be done. Responsible capitalism is a vacuous enough phrase that I can, as above, attach to it my own shopping list, my own hopes for how the world can be. It is not however a clearly thought through policy portfolio on either side of the house, and nor is it yet a vision for a better future.
The economic times we live in demand of a response adequate to the size of the problems we face. This may end up being titled responsible capitalism, and it is just possible that some of the ideas currently being floated by our politicians or our bankers may form part of the solution. For now we remain a long way from that point. My fear is that responsible capitalism is a convenient smokescreen for lack of action; all Cameronesque well-meaning sound bite that, when dissected for actual content, is found to be entirely empty, a conjuror’s trick. In reality little has changed from the days of supposed irresponsible capitalism. Bankers still award themselves astronomic bonuses. Our political elites still remain wholly reluctant to propose real change in the regulation of financial activity lest the banks decide to leave our shores. There may be talk of rebalancing the economy, of tighter regulation, of a holistic measure of progress which values more than the consumption of ever increasing resources in a world of diminishing supply; but so far we have little more than talk.
Debate over economic policy is largely dominated by the very narrow issue of how fast to cut the public deficit, and through what means. Somehow we failed to have the argument about whether this should be our primary focus, and there are good historical grounds to argue that focusing on cutting the public deficit is the exact opposite of what we should be doing at this point. Following the Great Depression the US and UK governments spent large sums, leading quickly to growth, a marked reduction in the public debt, and a decrease in unemployment. The same was true after World War II. The US government under Obama has also decided to stimulate – rather than starve – their economy; they are now seeing unemployment fall and hopeful economic results. In contrast austerity here is not having the desired effect of cutting the deficit in any meaningful way, while unemployment rises and the economy stalls.
We have the privilege of living in interesting times. We have the challenge of dealing with economic, ecological, and social crises (not least inequality and unemployment). We do not yet have a group of leaders or a set of ideas – political or economic – that have the depth or strength to lead us through to a better future. Responsible capitalism as a phrase and as a nascent set of ideas may just possibly be a step in the right direction; alternatively it may be a flash in the pan, as quickly forgotten as compassionate Conservatism, hugging hoodies or the ‘greenest government ever’. For a more courageous, more deeply thought, and more concretely visionary political response to an earlier financial crisis take a look at FDR’s first inaugural speech here
. With Roosevelt we can state that “the rulers of the exchange of mankind's goods have failed, through their own stubbornness and their own incompetence...[and] practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men”. He offered a clear way forward, and one that resulted in economic and social recovery. We do not yet have such a programme on offer, yet this is what we need. From this we can take hope – political leaders truly can rise to the challenge of the hour. We still need the ideas, and quite possibly the leaders, to take us there.