EVERY FRIDAY

ACCORDING TO the Archbishop of Canterbury, Justin Welby, Britain’s economic model is so irretrievably “broken” that we need radical reform to address the issues of poverty and inequality.

Bishop Welby was part of a commission put together by the leftwing Institute for Public Policy Research (IPPR) think-tank to analyse where the UK has gone wrong and come up with a plan to put things right.

The conclusion, published this week, makes for grim reading. The UK’s economy is the most unbalanced in Europe, says the IPPR commission, and contains more workers overqualified for their jobs than the rest of the EU.

The economy is unfit for the 2020s, it concludes, and we need fundamental reforms akin to the Attlee reforms of the 1940s or the Thatcher revolution of the 1980s.

I’ve no problem with commissions of the great and good coming up with new ideas – although I have to admit if I was in the market for economic advice I’d look beyond a Church of England cleric, even one as eminent as Archbishop Welby.

But are things really as bad as the commission suggests? Is our economic model really as “broken” as the Archbishop contends? Is there a risk that he is becoming a bit of a “weeping prophet” in the style of the Old Testament’s Jeremiah? Let’s look at the facts, shall we? According to the World Bank, 1.9 billion people, or 37.1 per cent of the world’s population, lived on less than $1.90 a day in 1990. By 2015, those figures had dropped dramatically to 702 million or 9.6 per cent.

This wasn’t achieved by government action, or aid budgets from rich countries, or by the activities of charities and NGOs. Instead the reason for the improvement can be summed up in a single word – trade.

In other words, free market capitalism has delivered a 74.1 per cent decrease in extreme poverty in just 25 years. Not bad for a “broken” system.

Wherever market liberalisation is introduced ordinary people get richer and the very poorest benefit most of all. Increases in wealth are accompanied by improvements in general health, education, life expectancy, and infant and maternal mortality.

In contrast wherever socialist and communist systems have been tried the results are invariably the same – grinding poverty (unless you’re are lucky enough to be part of the party elite), starvation and brutal repression. Take any example you like from the Soviet Union of 100 years ago to today’s Venezuela, and the same things happen every single time.

Perhaps Archbishop Welby’s defenders will say he was talking specifically about the UK rather than global problems? So is there any evidence that this “broken” system that has delivered astonishing improvements across the world has somehow failed the poor here at home?

In a word, no. Use whatever measure you care to look at and you will see that ordinary Britons have become hugely richer over the last 150 years and the incomes of the poorest have risen throughout that period.

What about poor people on benefits? Well, a welfare claimant today has a higher disposable income than the average worker in the 1930s. That’s right – people on benefits today are better off than average workers 80 years ago. Let that sink in for a moment.

But what about inequality – surely the rich are getting richer and the poor are getting poorer? No, generally the rich have become richer – and so have the poor.

In fact, inequality has decreased since the 2007 crash. This is because the incomes of the rich took a hammering (although, of course they are still comparatively rich) while the poorest were protected by the benefits system.

So we have record employment, rising living standards, decreasing inequality and dramatic decreases in extreme poverty around the world. Is the system really “broken”?

Of course there are still problems. Our productivity in the UK is still way too low and real wages have largely stagnated (perhaps if we solved the first problem, it would help solve the second?). And there are sharp regional inequalities, as the IPPR report demonstrates.

But we mustn’t throw the baby out with the bath water. To paraphrase Winston Churchill, capitalism is the worst economic system – except for all the others that have been tried.

And Archbishop Welby should remember the old adage: “If it ain’t broke, don’t fix it.”