Bat­tle for soul of cap­i­tal­ism

Scottish Daily Mail - - City & Finance - Ruth Sun­der­land BUSI­NESS EDITOR

THIS elec­tion presents vot­ers with the most stark choice on the econ­omy since 1979 when Mrs Thatcher came to power.

At the start of her decade-long ten­ure, few, whether friend or foe, imag­ined the scale of the economic and so­cial re­forms that would take place.

The City was opened up to for­eign in­vest­ment by the Big Bang in 1986, pen­sions were lib­er­alised, mort­gage car­tels were bro­ken and right-to-buy for coun­cil houses was in­tro­duced. Mil­lions of small savers also be­came share­hold­ers as in­dus­tries in­clud­ing Bri­tish Gas, BP and, of course, Bri­tish Tele­com were taken out of state hands.

The Labour Party wants to undo most of those re­forms and usher in a so­cial­ist regime with whole­sale re­dis­tri­bu­tion of wealth in­volv­ing puni­tive tax rates and as­set seizures. Swathes of in­dus­try have been ear­marked for re­na­tion­al­i­sa­tion, in­clud­ing rail, Royal Mail, wa­ter and now the broad­band in­fra­struc­ture arm of BT. Sim­i­lar pop­ulist Left­ism is be­ing aired in the US by Bernie San­ders and El­iz­a­beth War­ren, to the hor­ror of more sen­si­ble Demo­crat voices.

Here, both main par­ties have ditched aus­ter­ity and seem to be vy­ing as to who can of­fer the big­gest public spend­ing bribes. Of­fi­cial fig­ures this week are likely to show Gov­ern­ment bor­row­ing is al­ready on the rise due to slower growth. This is just the start.

If the Tories get in, there will be higher bor­row­ing to in­vest and get the econ­omy through the Brexit bumps, while un­der Labour, John McDon­nell plans to tap the bond mar­kets to fund his rev­o­lu­tion.

But this is not about the de­tail of tax rates or how many bil­lions we go into hock – im­por­tant though those things are. The elec­tion will de­ter­mine the shape of the econ­omy and so­ci­ety for years to come.

ADECADE ago, the fi­nan­cial cri­sis led to wide­spread dis­trust and con­tempt for busi­ness that is not con­fined to er­rant bankers and has not faded away. Jeremy Cor­byn and McDon­nell can see an op­por­tu­nity to ex­ploit peo­ple who feel left behind to plug their rev­o­lu­tion­ary so­cial­ist agenda.

It is telling that the FT last week hosted a de­bate en­ti­tled: ‘Should lib­eral cap­i­tal­ism be saved?’ That would not have oc­curred before the fi­nan­cial crash.

The big­ger pic­ture is that the UK needs to pay its way in a much more com­pet­i­tive world. Ger­many re­cently cel­e­brated the 30th an­niver­sary of the fall of the Ber­lin Wall and the lift­ing of the Iron Cur­tain. Since then, coun­tries that once were largely closed off from in­ter­na­tional trade have come on to world mar­kets, in­clud­ing re­source-rich Rus­sia and China.

It is a sign of the times that China wants to take over the bank­rupt Bri­tish Steel – an in­dus­try where the UK once led the world.

The past three years of rows over Brexit have had a huge cost for the UK econ­omy in terms of im­por­tant ar­eas that have been ig­nored or ne­glected. There has been no en­ergy left over to deal with ur­gent con­cerns for com­pa­nies and en­trepreneur­s, such as re­form­ing busi­ness rates.

If Boris John­son keeps the keys to No10 he needs to re­build re­la­tion­ships with busi­ness that have been put un­der strain and be­come a cham­pion of prag­matic, morally ro­bust cap­i­tal­ism. Should the Con­ser­va­tives fail to do this, Cor­byn and McDon­nell will re­main a threat or new ver­sions of an­t­i­cap­i­tal­ism will emerge. It is not an ex­ag­ger­a­tion to say the fu­ture of cap­i­tal­ism in this coun­try is on the line.

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