May is just letting Corbyn call all the shots
‘Afree-market economy, operating under the right rules and regulations, is the greatest agent of collective human progress ever created,” declared Theresa May last Thursday. “It is unquestionably the best, and indeed the only sustainable, means of increasing the living standards of everyone in a country.”
Economic Agenda unashamedly backs free markets. So I was delighted to hear that the Prime Minister was to give a speech at the Bank of England to “champion capitalism”.
Such an intervention could hardly be more timely. Jeremy Corbyn, at last week’s Labour conference, presented an economic manifesto both deranged and dangerous. His spending pledges, rent controls and other heavy-handed state interventions would be disastrous for living standards.
At the same time, many hardworking people now feel – rightly – the system isn’t working for them. Wage growth is subdued, living costs are spiralling and increasing numbers of families feel the cold wind of financial insecurity. Even middle-class professionals, having once assumed a steady job would lead to home ownership and a good lifestyle, are being forced to reconsider.
That’s empowered Corbyn to say “capitalism faces a crisis”. His statist solutions may be bonkers but millions are listening to “Jezzer” as they feel the economy is rigged against them.
Of course free markets are the “greatest agent of collective human progress ever created”, as May said on Thursday. Since the 1989 fall of the Berlin Wall, capitalism has lifted literally billions of people out of poverty. Over the past 30 years, the share of the global population in “extreme poverty” has plunged from 40pc to less than 10pc. This unalloyed triumph has been driven by the spread of property rights, contract law and private enterprise – in other words, by capitalism.
Closer to home, though, May herself has long acknowledged the need to create a Britain that works for the “just about managing” as well as the better off. In the quotation at the start of this column, she acknowledged the need to “increase the living standards of everyone”.
Given that, and the full-frontal attack from Corbyn, this Bank of England missive was worse than disappointing. Showing a woeful lack of imagination and courage at a crucial moment, May’s speech also failed utterly to grasp the problems of modern Western capitalism.
May should have confronted, head-on, Corbyn’s neo-marxist twaddle that capitalism inevitably leads to higher inequality. This is nonsense, as long as markets are working properly. The trouble is that capitalism, in the UK and elsewhere, isn’t functioning well because of cronyism, over-regulation and the long tentacles of vested interests. And that’s fuelling deep discontent.
Too-big-to-fail banks that extort government bailouts are anathema to capitalism. Monopolistic corporations that restrict competition and exploit consumers are anathema to capitalism. Powerful utilities that rip people off, and go largely unpunished, are anathema to capitalism. Plummeting social mobility is anathema to capitalism – because it seriously undermines the social contract upon which capitalism is built. And political, business and media elites that are far too entwined, with the same people moving easily between them, are anathema to capitalism.
These trends are increasingly apparent in modern Britain, to anyone with an open mind. That’s why the UK’S broad cultural and political acceptance of free markets is now being questioned, and urban trendy types are increasingly quoting Marx.
“We have already overhauled our system of banking regulation,” said May at the Bank of England, “putting in place strict new rules on bank ring-fencing”. Yes, almost a decade on from the Lehman collapse, sparking the crash that also exposed the rancid state of the UK banking sector, structural banking reforms are finally being implemented. Yet the safeguards have been so diluted by corporate lobbying as to be largely ineffective.
“We know our system of technical education leaves too many of our young people without the skills they need to get a job,” stated May, in her bid to counter Corbyn. So why has the introduction of new “T-level” qualifications, first announced in 2015, just been delayed again. This muchtrumpeted “revolution” in vocational training, vital to the hopes of countless youngsters, is now shelved until 2020.
And why – why?! – did May give an entire speech defending capitalism without even mentioning the single biggest grievance of the army to 25 to 40-year-olds who voted for Corbyn in June, taking him to the brink of power? Namely, our chronic housing shortage. For, above all, a housebuilding sector, deliberately restricting the supply of new homes to keep prices and profits high, presenting countless youngsters with the locked door of unaffordability, is anathema to capitalism.
“Why support capitalism if you have no capital.” It has almost become a cliché. But one apparently yet to penetrate the Downing Street bubble.
Capitalism, if it is to work well, and survive, requires a balance between enterprise and empathy, between determination and decency, between soaring corporate ambition and restraint. Governments, if they’re to survive, need to demonstrate they’re on the side of ordinary people.
May should have used her speech to declare she will renew capitalism, facing down corporate behaviour that risks systemic instability or displays excessive greed. Being pro-market, after all, does not always mean being pro-big business. May needs to understand, as does everyone who wants to defend capitalism, that it often means precisely the opposite.
‘May should have used her speech to declare she will renew capitalism’
Theresa May’s talk of helping those ‘just about managing’ has failed to convince many