Features

Capitalism’s most dangerous enemies are on the right

The far left can’t win without the aid of callous, complacent conservatism

22 August 2015

9:00 AM

22 August 2015

9:00 AM

Friends of capitalism feared that the events since 2007 — the financial collapses, bailouts, deficits and austerity — would produce a massive swing to the left, but it hasn’t happened. Voters have consistently chosen sensible, middle-of-the-road parties that undertook to steady the ship rather than sail in completely different directions. In reacting to the biggest crisis to engulf the free enterprise system for decades we’ve learnt that the spirit of the anti-capitalists is willing but their flesh is weak — and also that they’re simply aren’t enough of them. They can’t even read the books that they buy. Stephen Hawking’s A Brief History of Time did have the dubious honour of being the most unread book of recent times but then came Thomas Piketty; the French economist and unlikely rock-star thinker of the global equality movement. The Occupy Wall Street crowd bought his book in large numbers but guesstimates derived from Amazon suggest that the average reader may not have got much past page 26 of the 685-page tome. Capital in the 21st Century became a global bestseller but only 3.8 per cent of the pristine-looking book that sits ostentatiously on the coffee table, next to the latest works of Naomi Klein and Paul Mason, may have actually been read. ‘They started but couldn’t quite climax’ is set to be the epitaph of the anti-capitalist movement. With Jeremy Corbyn they may take over the Labour party but they won’t get into Downing Street. With the socialist senator from Vermont, Bernie Sanders, they’ll give Hillary Clinton a bloody nose in the primaries but they won’t prevent her winning the Democratic party’s nomination. Even in Greece, where the angries did win power, there was a lot of huffing and puffing but eventually they surrendered and agreed to enact more Thatcherite reforms in ten days than the Iron Lady managed in ten years. I’m glad the anti-capitalist movements are failing. For all of its faults, the spread of free enterprise across our planet has been a huge source of progress. The past 30 years have been correctly described as the greatest economic event in global history. Bigger than Christopher Columbus’s discovery of America. Bigger than the industrial revolution. The past few decades have seen global poverty fall by more than half — but having been fed a relentless bad news diet by broadcasters and international aid charities, a majority of voters have incorrectly concluded that hunger and poverty are up. Many in advanced nations such as Britain and America could be forgiven for being gloomy. The downsides for those at the bottom have been real. Even before the bailouts and austerity there was unemployment for people replaced by machines and stagnant wages for others. There was widening inequality and extraordinary house price inflation. The cycles of capitalism have always been tough for people. Ensuring that the public retains faith in the capitalist system will depend upon at least two ingredients. The first is a belief that we’re all moving forward in some way or other. Not necessarily all at the same pace but at least in roughly the same direction. The second is that there aren’t some people enjoying a special protected status. There needs to be a belief that the poor can get richer and, often forgotten, that the rich can get poorer. For all of the failures of the anti-capitalists, neither of those two conditions are being met adequately at the moment and that makes the system vulnerable. Many people feel they are moving backwards. There is a belief that some super-sized banks, well-connected companies and very rich individuals are insulated from the slings and arrows of outrageous fortune. If a humanitarian concern to ensure capitalism does deliver something for everyone isn’t enough to instigate reform, perhaps the recent experience of the Canadian right should provide sufficient motivation. There, the Progressive Conservatives had run the oil-rich province of Alberta for 44 years until May of this year, and they had begun to act as if they owned the place. They’d seen protest movements of the kind I’ve already described come and go. They’d become complacent. But everything changed three months ago. Alberta had seen its deficit explode because of the oil-price collapse. The ruling Conservatives told voters to look in the mirror if they wanted to know who was responsible for this mess and they announced 59 tax and fee increases. The only people spared from looking into the mirror were the oil companies and corporates. No tax rises for them. Voters were angry at this appeasement of big business, and they got angrier as they learnt that all tax relief for charities was to be axed — except the tax relief for political donations. Issues like the ex-Conservative premier’s $45,000 airline trip to attend Nelson Mandela’s funeral became ‘unforgotten’. Voters became so angry that in May they elected the New Democrats (NDP) to office — a party with a leader who wears a Che Guevara wristwatch, is married to a controversial union executive and leads a caucus that includes a defender of the late Hugo Chavez. As the Canadian commentator Ezra Levant observed, the NDP didn’t win because voters wanted a hammer and sickle. They won because voters wanted a broom. Canada will have a general election in October, and the NDP are now leading the opinion polls nationally. Stephen Harper’s nine-year-old Conservative government is again on the ropes over ethics questions and it looks a bit tired. The NDP are on course for victory again — despite, rather than because of, their left-wing politics. America is the other great capitalist country most vulnerable to an Alberta experience. Of the many outrageous things that Donald Trump has said in recent weeks, I was most struck by his honest answer to why this man standing for the Republican nomination had once donated to the Democrats. ‘When they call, I give,’ he said. ‘I said “be at my wedding” to Hillary Clinton and she came to my wedding… She didn’t have a choice because I gave.’ What other than wedding guests do big money US donors get in return for their cash? Many believe that big banks got a regulatory regime that contributed to the crash. Money might not be such a big problem in British politics, but an estimated half of the Tory party’s healthy bank account comes from the financial sector. This might help to explain why the party has done so little to reduce the UK economy’s dependence on financial services. And what about the fact that chief executives earn 183 times as much as the average worker — as we learnt this week? Is this the free market working as it should or are we witnessing a massive failure of corporate governance? And what about the dirty money flowing into London’s property market at the same time that millions of young people can’t get on the housing ladder? Where is the action rather than the rhetoric to fix that? Alberta provides a warning to all parties that support the free enterprise system. If you behave badly enough, not even the inadequacies of the anti-capitalist movement will be enough to save you. Capitalism’s biggest enemies aren’t the Corbyns, Sanders or Pikettys. They are the apologists within capitalism and within capitalist-friendly parties who are complacent and do nothing do combat cronyism, corporate greed and inequality. They, not the revolutionaries, could yet bring the system to breaking point.

Tim Montgomerie is currently producing a report for the Legatum Institute on the reform of capitalism.

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Show comments
  • Fraser Bailey

    An unusually good article for the Spectator/Telegraph wing. As it acknowledges, even those of us who believe in the free market and small government have become disgusted by the way in which the banksters and corporation bosses etc have been protected by the politicians. It has reached the point where some us would ever sacrifice the status quo for the mayhem that Corbyn’s policies would unleash if we at least had a little fairness.

    • Archibald Heatherington

      That is called cutting your nose off despite your face. Whatever the defects of capitalism, it does seem to bring up most people’s living standards beyond what’s imaginable without it. Corbyn and his ilk strew ruin and desolation wherever they go. Fairness be damned!

      • Frank

        Was Britain ever a hard core capitalist country? Yes, Thatcher thought that making Britain copy America’s raw capitalism would be a good thing, but the reality is that this nation has always been more comfortable with a much more low key capitalism – hence finding it hard to stomach some CEO of a listed footsie company (hardly an entrepreneur after all) on a salary which is 183 times greater than that of his/her average worker.

        • Jambo25

          We’ve had this exchange before Frank. I entirely agree with you. It isn’t Capitalism v Socialism but the defective Capitalism we have versus some better form of Capitalism.

          • Yvonne Stuart-Hargreaves

            I agree. Montgomerie and his CSJ were set up by the Tories to work out how to hide the defective capitalism from the majority and allow the 1% to continue filling their boots.

          • Jambo25

            I’ve expressed a preference for ‘Rhenish’ capitalism which takes a rather longer term view of the economy.

          • Yvonne Stuart-Hargreaves

            Montgomerie at least concedes that the credit crunch was the “biggest crisis to engulf the free enterprise system for decades”. He usually just sticks to it was all Gordon Brown’s fault.

          • Jambo25

            I think more destructive to the present capitalist order than the 2008 crash is the longer term trend (Since the late 70s) of the obvious emergence of a class of nationless and loyalty-less super rich, their very well paid and equally nationless supporters and us: the rest. We now have a series of free floating entrepreneurial and professional elites who appear to have few interests in common with the mass of the peoples in whose societies they live.

          • Kin62

            Good point. In 1914 and 1939 the richest families sent their sons to die in the service of their country alongside the poorest; they had disproportionately high casulaties. I bet they wouldn’t send them now. I can just hear it: “if we are to encourage enterprise, we can’t have people feeling they might die in a war”.

          • Jambo25

            Apart from a few old military families you are spot on. The days when Prime Ministers would lose their sons in war or cabinet ministers rejoin their regiments to fight died out with WW1 and 2. Now they would keep them safe at home so their City careers weren’t interrupted. Some dumb Jock, Geordie or Taff could die in their place.

        • Prendergast Walsh

          I would agree that the US version of capitalism is far more brutal than that that existed in the British Empire before the emergence of the USA in the first half of the 20th Century. More generally I don’t understand the pandering to the US (e.g. the endless coverage of the US presidential primaries?!), given that their policies of the early 20th Century were intended to destroy British influence in the world.

          • Frank

            Just the vacant brains in the British media world – you only have to look at the disproportionate coverage of Cilla’s death and funeral (particularly on the BBC) to start wondering how the BBC recruits its senior staff for the news section.

          • Jambo25

            Its Bread and Circuses for the proles.

          • Kin62

            Up to a point. You can be politically aware and also have other interests, you know, which can include watching Blind Date.

          • Yvonne Stuart-Hargreaves

            In the USA incomes for 80% of people have stood still since 1978.

          • Jambo25

            I’ve noticed this over the years when visiting my family in the States. The gap in living standards between me and them which was a yawning chasm, back in the 60s and early 70s, has narrowed considerably over the last 30 odd years.

        • Yvonne Stuart-Hargreaves

          The British are indeed happy with some regulated capitalism, but will no longer tolerate the massive Inequality that Montgomerie and his coterie of dogmatists promote and justify with such crass ideas as talent and hard work.
          We have waited 35 years for capitalism to raise all the boats, but all productivity gains are snaffled by the already obscenely rich. A fifth if all money going to 300,000 fatter and fatter cats.

      • cecile10

        ……cutting your nose off to spite your face……

      • The_Common_Potato

        I think the phrase is ‘to spite your face’, not ‘despite your face’.

    • Frank

      A further angle for UKIP to exploit will be this sense of injustice and the need to cull the crooked fat cats. It is astonishing that anyone in Government can think that it is a good idea to delay producing the reports into Iraq, the HBOS takeover, the various child abuse scandals, etc.

    • Kennybhoy

      Sound. That last sentence excepted.

  • Blindsideflanker

    Can’t disagree with that ..

    “FTSE 100 directors’ pay soared 21 per cent in the past year while average wages in the UK have failed even to keep up with inflation, highlighting the widening gulf between what executives and their employees earn.”

    http://www.ft.com/cms/s/0/30ff6900-50a3-11e4-b73e-00144feab7de.html#axzz3jL23TQkK

    The greed and avarice at the top makes Corbyn’s job very easy , and brings about their own and the systems destruction. Before these executives write out their own lottery sized pay cheques , they should remember there is a collective and national good that should also be considered.

    • Kampalaobserver

      HaHaHa. No chance. Broom needed, but not the Corbyn type.

      • Jambo25

        You may not be able to choose which form of broom you get.

        • Kin62

          I’m a moderate-ish Tory at heart. I have great respect for Thatcher. Becuase of how bad the wealth gap in this country is getting, I am now a member of the Labour Party and am likely to vote for Corbyn, whom I loathe, simply because he is the one politician who is standing up to this crap.

          • Jambo25

            I’m a straight out Scotnat but a centre right one. In Germany I’d be pretty close to the CDU. If I was living in England I’d be pro-Corbyn for the same reason you are. What worries me about him though is the baby revolutionary, down with the terrorists stance he takes. I don’t think he’s an anti-Semite. Nor do I think he’d a terrorist sympathiser but, like a lot of British leftists, he seems to find that some very nasty pieces of work are attractive to him largely because they are anti-Western; especially anti-American and anti-Israeli. I fear that he would carry these attitudes into practice in his foreign policy.

    • Alastair Houghton

      Of course, they don’t write their own paycheques. They write each other’s.

  • Dr. Heath

    The 2000 report by the IMF entitled ‘The World Economy in the 20th Century’ highlighted the period between 1950 and 1973 as the most prosperous in post-war history. This was a period not of laissez-faire, Business Knows Best economics but of capital controls, fixed exchange rates, large unions and a compromise deal with the electorate wherein the government played a major but obviously not Stalinist role in the economy. There is no reason, as apologists for the [yet to materialise but regularly promised] New Utopia of globalist, free-for-all non-government often proclaim, that laissez-faire free-market politics have produced or ever will produce manna for all.

    The world is increasingly full of Angries. They have votes and, like Tim, have asked themselves whether the free market is working and have concluded that it is, but for a lot of other people who are rich, often criminally inclined and often incompetent. I would rather stick pins in my eyes than have the Angry Party and someone like Corbachov win the 2020 election. The fact that it is even a possibility is down to the apologists for what looks like a Manna for Some dystopia rather than the attractions of the bonkers policies of JC and the Angries.

    • Clive

      The period 1950 – 1973 was not a prosperous time in Britain. Old people died of hypothermia routinely until a Swedish documentary shamed the government into doing something about it.

      There were endless strikes. The unions had a power that was absurd. I worked at a distribution company that had SOGAT as its main union. The SOGAT FoC determined which drivers had the best routes to get off early, etc. It was another kind of cronyism.

      Sterling was devalued by 14% in 1966 and then we had to go to the IMF in 1976 probably because of money printing by Tories. I was being brought up in a one bedroom flat with my mother; father; brother and sister. It had no bathroom and one cold tap and I lived there from 1947 when I was born until 1969 when I managed to move out. At least temporarily.

      We could not get a council house even though we were in the constituency of Reg Freeson, the Labour Minister of Housing. We never seemed to have enough ‘points’. Emily Thornberry lived in a council house but then, her mother was a councillor. They must have had enough ‘points’.

      This painting of that period as some Great Leap Forward is an ugly fantasy. The only good part was grammar schools which gave people like me a way out of poverty.

      They are out of fashion now.

      • Geo

        It was Labour that ran out of money. The Tories were not in government in 1976.

        • Clive

          Printing money has a long lag. In August 1975, inflation was just under 27%. The Tories printed money to manufacture a boom in the 1974 election – that may be what caused the inflation which led to other economic problems which led to the IMF which led to monetary controls which put an end to all that money printing…

          …and breathe

          • Neil Ashley

            Ah yes! The Barber Boom. Anthony “printer” Barber, the Great Inflator.

          • Geo

            We’d had high inflation and currency troubles since the late 60s. Some of the inflation was caused by the oil price spike, some was caused by the unions engineering excessive wages, and yes, money printing probably didn’t help. But it wasn’t just that.

          • Clive

            The oil price spikes did not start until 1974

            Money printing started on a grand scale when we started getting problems that governments could not pay for. I believe money printing was a major problem, although not the only problem. That’s why the world stopped doing it.

            Here is a history of inflation – at the end of this piece is a link to a list
            http://www.theguardian.com/news/datablog/2009/mar/09/inflation-economics
            The highest RPI got in the 60s was 6.3%. It was higher than that right through the 70s peaking at just under 27%.in 1975.

          • Yvonne Stuart-Hargreaves

            Inflation did not exceed 6% until 1969. The Oil shock was from November 1973 to April 1974 when the Oil price quadrupled. This gave us double digit inflation until 1982. The Union wage demands followed this, they did not precede it.

          • Clive

            Harold Wilson is alleged to have made the famous quote ‘Hughie, get your tanks off my lawn’ in 1969. In fact, apparently, he did not say it but Hugh Scanlon said he did and it highlights the troubles of the time. Hugh Scanlon was leader of the second biggest union in the UK at the time.

          • Geo

            I didn’t say that inflation exceeded any figure before 1969. I didn’t say that the oil shock happened any earlier than it did. We had high inflation before the oil shock, it went crazy after the oil shock, and was prolonged by trade unions. The union demands followed the oil shock, but this led to a continuous inflationary spiral, rather than the oil shock being a simple one-off event.

        • Yvonne Stuart-Hargreaves

          From 1951 to 1976 we had Tories in charge for 72% of the time. They spent 72% of the money.

          • Geo

            That doesn’t follow at all. Usually Labour governments are in favour of higher spending than Tory governments.

      • Dr. Heath

        The grim state of affairs you describe prompted a number of my relatives to depart for Australia and the States in the 50s and 60s. Most of those leaving in fact hopped on the boat before rationing had ended. All those who emigrated could look forward to more austerity and more rationing and very little in the way of prosperity had they stayed here. Today, their frequently unmarried [and childless] children and grandchildren, alas, now find themselves living in erstwhile rich countries in the diaspora that is the English-speaking Commonwealth that have a rapidly vanishing number of middle-class jobs due to outsourcing and offshoring , as well as completely unaffordable housing and the joy of frequent booms and busts and housing bubbles. The globalist utopia, one could argue, has led to as many gravely dystopic maladies in Vancouver and San Diego as it has, say, in English cities.

        The often archaic and ramshackle features of political life, of industrial relations, of education and technological development in the UK and other nations that are now, in most cases, members of the EU were so varied as to provide no one set of lessons as to how things could or should be improved. An unshakeable faith in a single theory of how to do everything concerning the economy or industry or politics is, like fundamentalist religious faith, a symptom of a profoundly deluded mind.

        • Maureen Fisher

          This is a model prevalent in the UK. Not so in Germany where there is plenty of reasonably priced accommodation and plenty of work.

          • Dr. Heath

            Every nation has a different profile. The pre-war and post-war cultural, economic and political differences between all the nations of Europe – those infinitely diverse place that fantasists believe can be conned, bribed or bullied into joining a large and blissfully content federation – are described in Postwar by Tony Judt. Judt seems to have been a believer in the EU project as some guarantor of social justice, yet most of his analysis points, in this and other works, to it being the insane undertaking of megalomaniacs and crackpots.

        • Yvonne Stuart-Hargreaves

          So 95% getting a TV, 80% a phone, 98% an indoor loo, 80% a washing machine, 70% a car, the glory years of the NHS and life expectancy rising by 16 years, the abolition of conscription, access to abortion and the pill, sex equality legislation, abolition of hanging, the end of Imperialism, package holidays, free university education based on merit, full employment, 68% home ownership, motorways, plus many more was in fact a “grim state of affairs”.

          • Dr. Heath

            I have no idea how your comment could possibly be a response to mine. None.

      • Jambo25

        Actually, the period 1950-1973 was a prosperous time in Britain.

        • Clive

          Define ‘prosperous’ in your context.

          In 1972 we had the 3-day week so I doubt you mean heat and light prosperity.

          I don’t doubt someone had money, Someone always does. Not most people, though. I imagine it’s prosperous in Zimbabwe at the minute if you are friends with the right people.

          • Jambo25

            The time scale given was 1950-1973. That was a period of constantly rising living standards. Some of us are old enough to remember Harold MacMillan and “You’ve never had it so good.” (Although to be fair that didn’t hit Scotland and areas of Northern England until the 60s.) Unemployment rarely rose above 3%.It was the start of the consumer society that WW2 and its aftermath had postponed.

          • Clive

            Correct me where I go wrong but I believe almost every year since about 1950 until 2008 was a year of rising living standards

            That has mainly been brought about by technological innovation but the notion that 1950 – 1973 was somehow superior to, say, 1985 – 2008 is wrong

          • Jambo25

            In terms of unemployment it was. We essentially had full employment until the early 70s. However, I never wrote that 50-73 was better than 85-2008: just that the period is generally considered prosperous.

          • Yvonne Stuart-Hargreaves

            A lot of the wralth of tge consumer society came about through the liberation of women. Educating women to degree level, the pill and abortion all helped as did hugely increased female pay.

        • Yvonne Stuart-Hargreaves

          Mainly because of the huge increase in equality that was reversed from 1979.

          • Jambo25

            That was certainly part of it.

      • Kennybhoy

        Great post!

      • Tim Morgan

        True. But I think there were specific problems between 1956 and 1963 that colour the whole era. Suez was a spineless disaster, followed by an irresponsibly quick withdrawal from ill-prepared colonies, and a reckless slashing of defence. There was the start of ill-planned mass immigration for cheap labour. There were spy scandals, and of course the Profumo affair. There was big cultural change at the same time – “Look back in anger”.

      • Yvonne Stuart-Hargreaves

        In the period cited the Tories were in charge for 17 of the 23 years.

  • Adrian

    A good article, although I think Tim felt the need to make sure he criticised the left more than the right. Cronyism is a problem in all political persuasions. I recall how many large UK companies had a senior Conservative on their boards during the Thatcher years, for example.

    As for boardroom pay, I don’t know the answer. It’s one thing for an entrepreneur to make lots of money but a Chief Exec is basically an employee. If their pay is 183 times that of their average worker then my guess is that there is something wrong with society that has companies valuing the job of Chief Exec so highly. For much the same reason as we pay people more to look after our money than we do to look after our children.

    • Blindsideflanker

      If you were writing out your own pay cheque, wouldn’t you always over estimate your worth, and decide you really really merited an eye watering pay rise? This is basically the situation we have in the board rooms.

      If it is to be sorted out , boardroom pay awards should be voted on in AGM’s , and that vote should be legally binding. In addition block votes by institutional shareholders should also come under scrutiny, and they should be made to declare who in their organisation made the decision to vote for , or against, the executive pay award, and the reason why. It least that would throw a little light on this murkey world of executive pay.

      • Jambo25

        The trouble is that the bulk of shares in publicly quoted companies are owned by institutions and the heads of those institutions and the companies they invest in often decide each others’ rewards packages.

        • Alastair Houghton

          Agreed. One way to address this would be to make sure that voting rights were devolved to individual investors if shares were held on their behalf. That would at least mean that you’d get to vote on matters relating to shares your pension scheme or investment fund owns on your behalf.

          • Jambo25

            Could that be applied to pension fund investors who are turning their pension or superan money over to the big institutions each month.

          • Alastair Houghton

            I can’t see why not, though do note that the pension funds have actually been among the agitators at some recent AGMs where shareholders voted against directors’ pay awards. I’d want to be certain that we weren’t replacing useful (and powerful) activist shareholders who were already holding directors and remuneration committees properly to account with large numbers of people who couldn’t be bothered to exercise their voting rights.

            So maybe devolution of voting rights should be something you can request, rather than happening automatically. Needs some careful thought, but I think on balance it could be a force for good.

          • Jambo25

            I think at the same time, though, some insurance company and pension fund managers have been major ‘troughers’ themselves.

          • Alastair Houghton

            Undoubtedly that’s true — turkeys don’t vote for Christmas, after all — and I think we both agree that shareholder empowerment is the number one way to combat this

          • Jambo25

            The problem there is that shareholding has become more and more concentrated in the hands of those big institutions. There are probably fewer effective (Note that word ‘effective’) individual shareholders than there were pre and immediately post war. Moreover the relationship between firms and institutional and individual shareholders has become much less personal and far more short term over the decades in the UK.
            Andy Halliday, in his recent BBC interview noted that, in the 1940s and early 50s, the average share was held by each owner for 6 years. That time span is now 6 months. German banks and investment trusts will sometimes hold shares and maintain relationships with firms, big and small, over very long periods of time on a multi generational basis. That means that German firms have a long term support mechanism in place. In Britain the opposite is the case. A good example being what happened to Scottish and Newcastle Brewers. When Carlsberg and Heineken decided to band together to take the company over and break it up to reduce competition not only did the big City institutions not support S&N but a number were the main cheerleaders and facilitators for S&N’s destruction. Could you imagine that ever happening to a German firm similar to S&N?

          • Jambo25

            Mr. Houghton, what is your take on today’s carnage on the various stock markets? It strikes me that we have some very panicky and not too bright people (At least not very good long-term strategic thinkers.) in charge of worryingly large amounts of the world’s money and economy.

          • Alastair Houghton

            I don’t think I’d be quite so unkind — yes, as always, there are people who predicted today/yesterday’s events, but of course they didn’t tell anyone when that was likely to happen (because they didn’t know), so in some senses it made sense for people with a high appetite for risk to keep investing on the chance that it wasn’t going to happen yet. Obviously if you’re doing that, you have to make a judgement as to when things will go bad, and some people will get that wrong and wait too late.

            Sudden falls in stock values are worrying, on the face of things. But, as ever, there is a flip-side. Immediately after a big slide like this, there tend to be a lot of stocks and shares available at historically low prices — a great time to buy. So, if you have e.g. a pension fund, you may actually benefit in the long term from a stock market fall, because when you make your next contribution your fund will buy more units than it would have been able to with the same money when prices were higher.

            Another plus point, for many people, is that the slide in stocks will discourage central bankers from raising interest rates.

          • Jambo25

            Much of my income is in an occupational pension. What mobile money I have my wife and I invest ourselves. I wouldn’t leave it to some of the gamblers and coke heads in the City.

        • Yvonne Stuart-Hargreaves

          FTSE is at the same level now as in 1998. Boardroom pay has quadrupled and rose another 16% last year alone.

          • Jambo25

            Once again, I agree. There appears to have been a medium-long term flattening of income distribution between the 30s and early 70s and then a growth, medium-long term in income inequality from the late 70s on.

      • Alastair Houghton

        Agreed, executive pay is an issue for shareholders. Do note that some institutional investors have been among the most militant in terms of opposing high pay awards, so they are not universally bad, but there is as Jambo25 points out, a problem in that the pay board of one company may well find itself recommending the pay package for a director who sits on the pay board of another company that employs members of the first pay board as directors.

        That is, while they typically *don’t* write their own pay cheques, they may well write the pay cheques of the people who decide theirs.

    • Alastair Houghton

      It’s undoubtedly the case that a good director can make a significant different to the profitability of a company, to its share price, and indeed to its employees’ prospects in terms of wage rises and so on; and the converse is also true.

      So it’s in shareholders’ interests to pay a decent amount of money to attract and retain good directors, and I doubt I’m alone in thinking it’s not unreasonable that if a director is responsible for a significant lift in share value or company profits, the company should look to remunerate that director accordingly. Traditionally this is done not through salary per se, but instead via stock options, bonuses and other contingent pay.

      I think concentrating on this figure of 183x is also a bit misleading. For instance, let’s say I run an investment bank, which has a lot of high-paid employees. My figure is probably well below that (indeed, directors of investment banks often earn less than their best traders, all told), and if I want to reduce it I can outsource all of the low-paid work to service companies. On the other hand, let’s say I run a service company (e.g. an office cleaning company). Well, now I employ lots of low-paid workers; I could pay myself much less than even a mid-level manager at an investment bank and *still* end up with a horrible sounding pay ratio.

      My take on this is that directors’ pay is properly a matter for shareholders. There are some issues relating to the way remuneration committees work, regarding shareholders’ ability to set or regulate directors’ pay, and so on, and these should be addressed, but that doesn’t mean it’s always wrong for there to be a large gap between different jobs in an organisation.

      • Adrian

        But is this sustainable? There is a bubble in exec pay. Leaving aside the democracy gap which is the bloc voting by institutional shareholders for the moment, just how far can exec pay go before the investment industry realises it has to be reined in? I do think there has to be some kind of state intervention here, much like there has been for unions. Some kind of taxation charged to companies should do it, with the proceeds used to fund training or seed capital for new ventures.

        • Yvonne Stuart-Hargreaves

          More simple would be a 60% tax on bonuses and share options in excess of £100,000 and a top rate tax of 60% on pay over £750,000. Jeremy is already interested in this proposal.

          • Alastair Houghton

            High taxes won’t help anyone here. The companies we’re talking about are very large and if you slap ultra-high taxes on their directors’ pay packages, both directors and shareholders are likely to try to relocate company headquarters to a more friendly tax regime.

            Plus, as I’ve been saying above, whether or not (for instance) Martin Sorrell’s pay is too high is a matter for the shareholders of (in his case) WPP. There’s really no reason for government to involve itself in what is a private contract between two parties. You might well have a personal opinion as to whether Martin Sorrell is worth his £40m+ pay package, but he isn’t working just for you — it really is for the people who put up the capital that allows WPP to operate to make a decision on the matter.

          • Yvonne Stuart-Hargreaves

            Oh. I think you’ll find most people would prefer the greedy rich to leave and stop abusing our tax system. The trade off being they are not welcome here, even as visitors, and certainly not to shelter their I’ll gotten gains.

          • Alastair Houghton

            Then “most people” don’t have a clue what they’re talking about.

            I don’t want the ultra-high-paid to leave the country and leave the rest of us with a higher tax burden. Also, if the tax system says that instead of paying huge amount X, they can do A, B and C and instead pay smaller amount Y, then the fault is with the tax system. Tax isn’t a moral issue — the amount you are obliged to pay is set out in law, according to sets of rules. That the rules are overcomplicated and that tax rates are so high as to incentivise spending on tax accountants to find ways to reduce peoples’ liability (finding the A, B and C above) is the fault of government, and if you want fairer taxation you really should demand simpler, more transparent and flatter taxes.

          • Yvonne Stuart-Hargreaves

            How is flat tax fair?

          • Alastair Houghton

            Flat tax with a large personal allowance is certainly fair. It means, modulo the personal allowance (which should ideally be set at or around an estimate of the basic cost of living), that everyone pays the same proportion of their income in tax.

            That is, the rich pay more in tax than the poor (and indeed, with the personal allowance set as suggested, the poor should be paying no tax at all).

            The “progressive” tax system that we have right now seems unfair to those in the higher bands, because they not only pay more tax, they pay disproportionately more tax (or would do, if they did nothing to avoid doing so). As a result, they have a strong incentive to spend money on accountants to try to minimise their tax bills, and because our tax system is very complicated and because the high rate means they can pay quite a lot of money to accountants to reduce their bills and still come out having spent less on accountants plus tax than they would have spent on tax alone if they were naïve, it’s unsurprising that some of them end up paying very little tax at all. i.e. at least at the top end, the perverse incentives we’ve set up have actually turned what is supposed to be a progressive system into a regressive one.

            Personally I’m in favour of scrapping National Insurance, setting the Personal Allowance perhaps as high as £20k, and then operating a flat 35% tax after that with no other allowances or concessions. I’d also merge capital gains into income tax (so the CGT rate would be 35% also), but allow adjustment for inflation on capital gains and bank interest (taxing people on inflation is unfair; it isn’t a gain).

            Oh, and at the same time I’d look at abolishing Corporation Tax, together with the dividend tax credit that’s supposed to offset it. You may say, well, Vodafone (for example) should pay tax; but in practice companies will pass on the effects of taxation to customers, employees and shareholders in the form of higher prices, lower wages and reduced dividends/share prices. The latter is perfectly fine, since the shareholders own the company, but the two other effects are not fine; the fix is to make sure that shareholders pay full income tax on capital gains on shares and on dividends, rather than taxing the company as an entity. If they choose to leave money in the business, prices will be lower and employees higher paid; if not, they will pay the full amount of tax. What they won’t be able to do is to pass on the cost of corporate taxation to customers or employees, then claim a tax credit for themselves and pay the rest at a reduced rate, which is what happens now.

            TL;DR: Flat taxes will be simpler and will raise more from the rich, who will have fewer incentives to “dodge” them. That is definitely fair.

          • Yvonne Stuart-Hargreaves

            How does everyone pay the same proportion with your flat tax? Someone on £50,000pa would pay 21%. Someone on £100,000 ,28%. Someone on £1 million will pay 34%. Those on average pay would pay only 12%.
            Currently millionaires pay close to 45% in tax and NICs . you propose reducing the tax take by over half. Ludicrous.
            The most sophisticated avoidance scheme litigated by HMRC in the last three years involved avoiding CG at 12%. I’m sure the greedy rich will still seek to not pay whether it is 35% or 47%. The important bit is to signal that wider society considers snouts in troughs and lining ones pockets as anathema.

          • Alastair Houghton

            That’s the thing, though — currently, millionaires don’t pay “close to 45% in tax and NICs”. They pay themselves in dividend or make capital gains, sometimes within government-designed investment schemes that reduce the tax liability even further. And that’s without even talking about schemes that are unlawful and that HMRC could litigate.

            As for reducing the tax take, I’m not writing a manifesto here; there would be other changes too that would go with all of this. I’m pretty certain it’s possible to come up with a solution that would adequately balance the books.

            The point is that the “soak the rich” mentality that asserts that the rich should pay tax at a higher rate is childish and ignores the fact that “the rich” are human, just like everyone else, and that a fair proportion of them will go well out of their way to avoid a situation they regard as unfair.

            (I’m going to ignore the bit where you point out that it’s still, overall, progressive, because I already told you that. It’s only flat after the personal allowance, by design.)

          • Yvonne Stuart-Hargreaves

            Man on £500 a week buys a £400 fridge. VAT is £100 . 20% of his pay.
            Man on £20,000 a week does the same. He pays O.5% of his pay. VAT is a flat tax, it hits the poor hardest.
            I assume the £125 billion shortfall in taxes your proposal envisages will be made up by putting the burden on poorer folk as you seek to lessen the burden on the rich.
            60% of those earning £1 million plus are employees. How do they “pay themselves in dividends or capital gains “?

          • Alastair Houghton

            VAT is a consumption tax, and we aren’t talking about those here.

            As for the rest, well, first off I don’t have a fixed idea as to exactly where the personal allowance should fall, so any numbers you or I discuss are meaningless. Second, the very notion of a tax “shortfall” implies that all current government spending is entirely necessary, which I seriously doubt is actually the case. Third, “the poor” would all be taken out of tax completely; it’s reasonable to suppose that some benefits could be reduced or eliminated as a result, certainly, but equally I’d be doing away with a lot of tax perks enjoyed primarily by the wealthy (you say 60% of those earning £1m+ are employees — I have no reason to doubt that, but are you saying that those people don’t have accountants, and don’t use ISAs, SIPPs, EIS, etc… to reduce their tax liability?). Fourth, if we assume a £20k allowance, Joe’s tax would halve (approximately), while a person on £540k would only see themselves paying 1/5 less, and that’s assuming they paid the full amount in the first place (Joe, in contrast, is very likely to be paying pretty much the full amount).

            What I’m saying here is that you shouldn’t take my suggestion too seriously; it is just a general idea and would need to be fleshed out carefully. The numbers I suggested OTOH and might well need to be revised if such an idea was to be implemented.

          • Y&B Stuart-Hargreaves

            I do not take your numbers seriously. They are ridiculous. Not least your cynical desire to not tsmperveith “consumption taxes” which hit the poor hardest. You also boldly define the poor as those with less than £20,000 pa. So a family man with two kids , earning £21,000, is not poor then. By your reckoning unlikely to need benefits.

          • Alastair Houghton

            I have not said I didn’t want to alter consumption taxes, nor do I “boldly define” the poor as those earning less than £20,000pa. Kindly stop putting words into my mouth.

          • Y&B Stuart-Hargreaves

            You propose that income tax is a flat tax of 35% with a personal allowance of £20,000. You then say the poor would be taken out of tax altogether. Ergo you imply the poor are to be found somewhere below £20,000pa.

          • Alastair Houghton

            I think that’s broadly true (though note that I didn’t explicitly propose £20k; I gave that as an example only and have stated such several times so far).

            As for your remark about your putative “family man”, if he’s married then I’d point out that I’m in favour of merging married peoples’ tax allowances (hence he and his spouse would be able to earn up to £40k tax free). I’d also be open to allowing widows and widowers to keep their spouse’s tax allowances (until/unless they remarry), FWIW.

            I don’t think the children in your example should have any effect on whether or not their parent is considered poor — though I accept bringing two kids up on an income of £20k would be challenging and it may well be that some people will need child benefit so their children are not disadvantaged by their parents’ circumstances.

          • Y&B Stuart-Hargreaves

            Widows keeping their spouses allowances should create an unhealthy market in quickie weddings with the terminally ill.

          • mohdanga

            How are their gains ‘ill gotten’?? A bonus for good performance is certainly not illegal, nor immoral. I get a bonus every year….am I ‘rich and greedy’ because of this or should I just not bother to want to improve my lot?

          • mohdanga

            Yes, that will work wonders for entrepreneurs.

          • Yvonne Stuart-Hargreaves

            All I have proposed is that someone on £20,000 a week pays an extra 2.8% of their income in tax.

        • Geo

          All you need is to scrap remuneration committees and simply have direct shareholder votes each year.

          • Adrian

            Yes, and I don’t see why that is so difficult for governments to understand when they are happy to stop union leaders casting votes on behalf of their members.

          • Alastair Houghton

            Nothing wrong with remuneration committees presenting a recommendation to shareholders. It’s important, though, that shareholders should be able to effectively veto whatever package is presented — and indeed, if necessary, put forward their own alternative.

          • Geo

            If the shareholders choose to assemble their own committee to present recommendations I have no problem with that. The ultimate power must rest with shareholders.

        • Alastair Houghton

          I don’t think it’s proper for the state to intervene, other possibly than to empower shareholders where companies’ Articles prevent accountability. Let’s just remember whose money it is we’re talking about here — companies are owned by their shareholders, who put up their capital for the company to use to conduct its business. Directors may be employed by the company (as an entity), but they work for the shareholders.

    • Yvonne Stuart-Hargreaves

      Cronyism got Christian Guy appointed as Cameron’s policy adviser. Must have disappointed the Exeter Uni’ Tory six. Isabel ,Tim Sajid et al must have wanted one of their own clique.

  • Clive

    This bit in particular I think is wrong:

    There is a belief that some … very rich individuals are insulated from the slings and arrows of outrageous fortune.

    It isn’t the super-rich who are the problem. They will always be insulated from economic problems by diversifying their wealth.

    The problem is the people in the middle. The professional classes. Lawyers; ‘media professionals’ like the hundreds of managers at the BBC who earn more than the prime minister; ‘journalists’, etc.

    These groups lend themselves to cronyism. Their children get jobs through being ‘connected’. Look at the dynasties in journalism, media and so on. A device for this cronyism these days seems to be the unpaid internship but I don’t doubt there are other, more direct ways.

    I don’t know what we can do about that. People will always want to find favours for their children.

    I cannot see what’s wrong with inequality – Ask someone if they won the lottery big, would they give the money away – I can see something enormously wrong with inequality of opportunity.

    I can see how having some thick as pigshit public school idiot in a managerial job above you – as I did in most of the early part of my career when I started in computers in 1967 – breeds a sense of grievance. It also makes the economy hopelessly inefficient.

    It may be that what we are seeing in politics (Left and Right) now is exactly that inequality of opportunity writ large. I don’t know enough about the backgrounds of major politicians to be able to say.

    But it has to stop.

    • Kennybhoy

      “The problem is the people in the middle. The professional classes.”

      Insightful. The corruption is much closer to home than remote politicians, bankers, etc.

  • jim jones

    The credit bubble was caused by Alan Greenspan, only journalists are dumb enough to blame bankers.

    • Alastair Houghton

      Alan Greenspan was a banker. (A central banker, admittedly, but a banker nonetheless.)

  • http://www.worldsocialism.org/spgb/ The Socialist Party

    Global capitalism is outdated and in urgent need of being replaced with a far more efficient, far more productive economic system that has never yet existed anywhere. It is called “socialism”. Yes, you heard right. Despite decades of lies, deceit and downright garbage from the media and fans of the capitalist elite, the fact is a classless moneyless socialist economy with production purely to meet needs and free access to all goods and services has never existed! http://www.worldsocialism.org/spgb/what-socialism

    • GUBU

      Interesting….

      I may come along to your next party meeting to find out more.

      Remember to set out a third chair just in case I turn up.

    • Blindsideflanker

      Hasn’t Socialism been tried, time and time again, and time and time again shown that it miserably fails.

      Can the good citizens of Venezuela get toilet paper or is that beyond the abilities of the socialist regime to provide it?

      Gather there is beer shortage, as well, and looting has become endemic as people struggle to get the basic necessities in that socialist paradise.

    • Alastair Houghton

      The reason socialism won’t work is obvious, when it comes down to it. If you make everyone equal, there will be jobs that nobody wants to do. Nobody will want to clean the fat deposits from sewers, for instance (a nasty, nasty job). But someone has to. Thus a true socialist state will have to compel people to do these jobs. And someone else will have to decide who to compel. Do you suppose it will compel the executive committee? No, of course it won’t.

      Likewise, if everyone is equal, who gets to live in Buckingham Palace? Or Chequers? If your answer is that the party elite will live there, then not everyone is equal. If your answer is that such things will be used as rewards for achievement, it’s worth pointing out the degree of nepotism inherent in such a structure — there will be many worthy souls who are not even considered because they have never come to the attention of the head of the politburo (for example).

      You might be of the bent that argues we should demolish such buildings, or keep them as tourist attractions. Fair enough, but then who lives in tower blocks? Who lives in the cities? And who lives in the countryside? Or by the sea?

      The fact is that socialism will always degenerate into authoritarianism, because it has to. It must have rules to decide who gets the use of the decidedly unequal assets offered by the real world. Some people will end up toiling in factories (or worse, scraping the fat from the sewers), while others will end up directing the operations of thousands of workers; do you suppose they will feel equal? No, of course not.

      Even if we had robots to do all the unpleasant jobs, which makes socialism a lot more workable, that still doesn’t deal with the fact that more people want to live in a beautiful cottage in Cumbria than there are cottages there. Did you know that you could fit all the platinum mined in history into a single average-sized American living room? How are you going to address the demand for platinum jewellery? Platinum has significant industrial uses. Maybe jewellery is banned and confiscated “for the good of the people”? Sound like paradise to you?

      Capitalism, on the other hand, *does* address all of these things, and, with appropriate market regulation, works.

  • Frank

    Tim, a crucial element in keeping people happy with capitalism is ensuring that fraudulent acts and reckless negligent behaviour are treated equally, whether done by somebody at the bottom of the social ladder, or by someone at the top of the ladder. There appears to be profound general doubt that equality before the law is currently the case in Britain.
    The fact that the money laundering rules don’t seem to apply if you are a foreigner with unexplained wealth is yet another curiosity of the current and last Governments. Ditto the fact that no serious effort is put into ensuring that the big internet companies pay an appropriate amount of tax in Britain on their British sales.
    The astonishing thing is that the Government (and the Tory party) doesn’t appear to mind being manifestly so biased in favour of financial institutions carrying out frauds, tax-dodging American internet companies and rich dodgy foreigners?
    At some point there has to be a reckoning, and the (arguably childish) people thinking that Corbyn might be a good thing are a manifestation of this drive for equal justice.

    • Chamber Pot

      I find it difficult to express my agreement more completely.

      The UK has a very serious and worsening corruption problem and, if left unpunished, it will in the end lead to a collapse in living standards and civil unrest.

      People have already have made the connection between mass immigration, big business and the extinction of the welfare state.

      Perhaps it is time to have a properly constituted Independent Commission against Corruption “ICAC” preferably run by a foreigner initially as they do in Hong Kong and New South Wales ?

    • Tim Montgomerie ن

      Thanks Frank. A more equal access to the law is essential to remedying the real problem you identify.

      • Jambo25

        A willingness by the various British establishments to punish ‘their own’ for atrocious behaviour is even more necessary. A number of major institutions, in this country, have displayed forms of behaviour which verge on and stray into the criminal yet they are never held to criminal account. They are held to criminal account in the USA as a number of British banks have found out. A more understanding view of their behaviour is taken in the UK.

        • Prendergast Walsh

          In theory, the regulatory regime (I am a compliance officer) in the UK should prevent money laundering and the sort of behaviour that we have seen over the past decade. But it does not.

          The problem with the regulatory authorities in the UK is that they are not fit for purpose. What I mean by that is the lack of supervision/enforcement of their rules (it is very rare that the FCA visits the firms it regulates – unlike the SEC/FINRA), the ineptitude of the staff working at the regulator (during the only visit from a regulator that I have overseen, their first question was, “what is corporate finance”); the turnover of inept staff and the prevalence of cronyism within the management of the regulator (during the crisis there were directors of banks sitting on the board of the FSA and Labour party appointees).

          Moreover, recent events (e.g. Tom Hayes’ conviction for LIBOR manipulation) show that there is a scapegoat culture whereby the authorities look for the low hanging fruit rather than investigate the core of the problem; can anyone seriously believe that his bosses were not aware of what he and many others were up to? The FCA Rules (in theory) are designed to ensure that where senior management are complicit in such illicit activities, they (and the firm for which they are part of senior management) should be punished for failures in their internal systems and controls. But they have not been punished (nor was Fred Goodwin) nor, one suspects, will they ever be. What tends to happen is the large firms settle rather than face criminal charges which makes a mockery of the regulatory regime.

          Until the quality of people working at the regulator improves and the FCA starts using the tools at its disposal then I fear that those within the financial services industry will (notwithstanding banking levys etc.) continue to behave in the manner that they always have.

          • Des Demona

            Indeed. Good post. Thanks. However, I wonder if the culture is too ingrained to ever change irrespective of the quality of the regulators? I would imagine that jailing a few at the top might go some way to changing attitudes but I don’t see it ever happening ( the jailing or the change of culture) in an environment where you can earn more in a week than most people earn in a year, especially if you are willing to bend or break the rules.

          • Jambo25

            Thanks for the information. I have no real expertise on what happens at the level you are describing. I just know that it isn’t effective and that money laundering, on a fairly grand scale has been going on for a long time. I think the cases involving HSBC speak volumes. The bank was clearly a willing participant in laundering money for Mexican drug cartels and other British banks seem to have been involved as well. The same bank appears to have been doing something very naughty through it’s Geneva operation. Do we know if that involved money laundering as well?
            Strangely enough, I was talking about the Hayes case with a relative last Sunday. She has just resigned a reasonably senior position with a big bank. She just couldn’t stand it any longer and so she was possibly a bit more open than in the past. She pretty much echoed you. He was a human sacrifice to keep eyes off people higher up the tree according to her. Incidentally she used to have a job in her bank which dealt with money laundering prevention. At ordinary branch level they were strict and counter staff were instructed to ask a lot of questions if large sums of cash kept appearing from certain customers. Further up the money tree precautions were much more lax.
            One of my older friends is an insolvency practitioner. He has his own small firm now but use to work, as a partner, for a large mixed financial services firm. He investigated a number of largeish bankruptcies in which it became clear that firms were being used as shells to launder money for drug gangs and the IRA. He reckoned car dealerships and pub/catering firms were favourites and that some of the banks involved must have known what was going on but simply turned a blind eye.

          • Yvonne Stuart-Hargreaves

            There is deliberate obfuscation at the top. Look at the ridiculous little Anti-Money Laundering Service within HMRC. Ludicrously understaffed and marginalised in a tiny corner of the organisation dealing with complaints and appeals against £100 penalties. Under resourced and badly led, totally unfit for the huge task it supposedly exists for.
            I have heard that within HMRC it is known as Aimless , not just because of the acronym AMLS but because it does next to nothing.

      • Yvonne Stuart-Hargreaves

        Equal access Montgomerie? Your Government has cut the MoJ budget by 60% and legal aid to the bone. Well done with forcing the first Barristers strike in history.

    • Kennybhoy

      “There appears to be profound general doubt that equality before the law is currently the case in Britain.”

      This with bells on.

      • Johnnydub

        But the real issues are with the establishment.

        Until there is accountability for the civil service and the public sector, things are going to get worse.

        The banking crisis wasn’t caused by fraud, it was caused by bad regulation and bad regulators. Has anything changed?

        How many deaths at Stafford and others with zero firings and zero persecutions?

        As for “no serious effort is put into ensuring that the big internet companies pay an appropriate amount of tax in Britain on their British sales.” – campaign to leave the EU then, as this is the EU working exactly as designed.

        Finally the BBC pumping out its monocular vision of acceptable society and morality – when bollocks is it…

        • Des Demona

          ”The banking crisis wasn’t caused by fraud, it was caused by bad regulation and bad regulators. Has anything changed?”
          Ummmm…..nope. Can’t be bothered finishing this one.

        • Johnny Foreigner

          Public sector accountability, it’s gotta happen, but no politician has the balls, not now or the near future.

        • sedricson

          “The banking crisis wasn’t caused by fraud, it was caused by bad regulation and bad regulators.”

          What ever happened to individual responsibility? Surely that is one of the founding principles of conservatism…and many of our economic structures? The CEO’s and boards of banks are accountable to their shareholders in just the same way as any other company. Therefore they should be operating in their best interests.

          This argument that, “the regulators messed up, they made us do it”, takes us nowhere. It is exactly the type of argument that the article criticises. Could you imagine a power company in the UK for example causing major economic (or other) harm and then turning round to blame the regulator?

          If the board is responsible to the shareholders then it will act in their interest…which doesn’t involve causing economic harm to themselves or the wider economy. These seem like reasonable principles…?

          The (valid) point of this article is that its time to stop looking at issues through traditional lenses and along traditional lines (left/right) and face up to some realities…there are many things that are fundamentally wrong, need to be improved and addressed.

    • Yvonne Stuart-Hargreaves

      HMRC prosecute 3,000 “benefit cheats” each year , but only 5 millionaires, all described as sophisticated tax avoiders as if it is some kind of accolade. Meanwhile no prosecutions for paying minimum wage and virtually no staff to enforce it.
      Montgomerie implies the worst thing capitalists can do is apologise. Childish simplistic drivel again.

      • mohdanga

        Tax avoidance is not illegal, tax evasion is. Why should millionaires not seek to avoid paying taxes, just like any other citizen is eligible to? Do you pay more than what are legally obligated to?
        And when did paying the minimum wage become a crime?

        • Kin62

          Not paying the minimum wage is a crime.

          A particular bugbear of mine is restaurants who keep the staff’s tips. That is just theft, pure and simple.

          • mohdanga

            Is paying the minimum wage a crime? A simple question. I said nothing about tips or gratuities.

  • tohellwithit

    Stopped reading at ‘‘They started but couldn’t quite climax’ is set to be the epitaph of the
    anti-capitalist movement. With Jeremy Corbyn they may take over the
    Labour party’.

    Jeremy Corbyn is not anti-capitalist, he’s a left-wing social democrat, he believes in a mixed economy.

    I used to respect you Tim, even though you were Conservative, you appeared moderate and not given to hyperbole, but in your clamour to protect the establishment you’ve just made yourself look a bit silly.

    • Blindsideflanker

      The days Corbyn harps back to of Micheal Foot and Tony Benn, the UK had less of a mixed economy than some communist countries behind the iron curtain.

      • tohellwithit

        Ditto!

  • greggf

    “Tim Montgomerie is currently producing a report for the Legatum Institute on the reform of capitalism.”

    Grinding an axe Tim…?

    The biggest danger to capitalism is welfare and its effects.
    If you want reform capitalism without reforming welfare you will end up supporting Corbynism.
    Welfare claimants in Britain can evade employment, foster their protests at taxpayer’s expense, enjoy health care gratis, never account for their nihilism…..
    I could go on.

    Perhaps you could examine the causes of the decline and fall of the USSR and the crucial role of its “Symbolist class” in this, and their relevance in the West today.

    • Blindsideflanker

      No, part of the rot we need to deal with is corporate socialism , like Tax Credits which are a subsidy to employer’s wage bill. Also mass immigration which depresses wages and unloads social costs onto the tax payer.

      • tohellwithit

        Ditto.

        • tohellwithit

          Opps, replied to wrong comment, sorry.

    • Tim Montgomerie ن

      Hi Greggf: I support welfare reform, too and agree with George Osborne that if the State is ever to spend the sums on infrastructure that will be necessary to ensure we flourish we will need to spend less on welfare.

      • greggf

        I appreciate your reply Tim; then, your report so the Legatum Institute should succeed.

        • Yvonne Stuart-Hargreaves

          It can’t fail. He is preaching to the converted. These are not really reports, these are not really charities or pressure groups. They are the clandestine cover to put a veneer of respectability on the way the Davos set, Mont Pelerin society, the CoLC etc control the second rate politicians that are happy to pander to their wishes.

      • Clive

        Whilst explaining the Symbolist class you might also explain the role of the nomenklatura in the USSR

        I don’t think any of them were ever on welfare

      • Yvonne Stuart-Hargreaves

        How much less? Osborne is cutting public services by 40%. How little government is good government in the eyes of your rich greedy backers Tim?

    • Yvonne Stuart-Hargreaves

      Montgomerie working for another shadowy right wing think tank ,funded from Dubai by the global elite to sow the seeds of their bidding in gullible and receptive puppet governments. Montgomerie is no rich bitch but is effectively a bitch of the rich.

  • Ambientereal

    Hardcore capitalism (with low salaries and hard working conditions) is no longer fashion. Capitalism needs sellers and buyers. The first function of the government is to see that employees receive a proper salary because it increases consumption and in turn produces more jobs. Lately governments have increased the taxes (to help the poor with social aid) and this stopped the creation of new jobs what produced more poor people. Intervention of government must be reduced to a minimum, ensuring very good salaries and providing basic services like education, health, justice and infrastructure.

  • Dan

    All the problems you cite require state interference and will never be tackled by a Conservative government. Inequality and a lack of social mobility can never truly be solved without aggressive redistributive taxation, stronger unions, a less flexible job market (abolishing zero hours) and industrial democracy, not to mention a large welfare state. The property market cannot be fixed without state funded house building. An over-reliance on the financial sector cannot be solved without more state investment in infrastructure and industry, and a tighter regulation of the banks.

    The ‘radical left’ is becoming popular because it has actual solutions rather than pretending to care about these issues with disingenuous policies like raising the personal allowance. Capitalism cannot be reformed without a larger state.

    • WFB56

      You appear not to have been reading the article or following elections as the radical left are not becoming more popular, they are becoming more vocal and that’s not the same thing.

    • Kin62

      Being one of nature’s Tories (heck, my mother is a grocer’s daughter), I would prefer that these economic problems were solved responsibly and in a liberal fashion by the Conservative Party, but I won’t hold my breath; in its current form, it is obsessed with maintaining the economic status quo and indeed seems to enjoy inflicting pain on the less fortunate.

      I can no longer accept this, and am now a member of the Labour Party, which is full of complete idiots- like, unbelievably stupid, bigoted, smug people- and likely to vote for Jeremy Corbyn, who is insane.

      I am not the only despairing Tory moderate that I know who has done this.

  • Jambo25

    A story appeared in the Nationalist leaning web site, Wings over Scotland, a few days ago. A young woman in Kidderminster lost her benefits through being sanctioned and stole 75 Pence worth of Mars Bars as she was starving. She was fined and charged a total of over £300 which she had no hope of paying so she would probably have ended up in jail. On virtually the same day a city scumbag, Edward Drew, was found guilty of ‘glassing’ several people in a Moorgate bar. One person had her throat cut.
    He was given a suspended sentence and fined just over £1500 as the judge did not want to give him a custodial sentence and possibly damage his career.
    The Nationalist web-site launched an appeal for the young woman and raised a great deal of money. The surplus is going to a food bank (Opened by David Mundell; so no sense of irony there.) in Dumfries. This story has now been picked up, as I write this, by media outlets in Poland, Slovakia and Italy. It will probably spread further. This is now one of the images of the UK abroad. What, in God’s name, is wrong with this country?

    • Clive

      It was raised on a SNP website by a man in Bath

      Odd, don’t you think ?

      • Jambo25

        It makes me think its odd that no part of the English based MSM raised it. However, as the WoS story put it there should be no borders blocking solidarity in cases like this.

        • Clive

          …Apart from the Daily Mirror and The Independent

          This raising it in Scotland is odd and obviously political

          • Jambo25

            Did the Mail and Independent contrast the Kidderminster and Drew cases?

          • Clive

            I don’t know about the Mail because I don’t read it

            The Independent pointed out that the magistrates have no leeway in the fine they impose and nobody has said why here benefits were stopped

          • Jambo25

            I think that was after they picked up the story from Wings over Scotland.

      • Yvonne Stuart-Hargreaves

        The Legatum Institute is based in the UAE, why do they seek to influence the UK Tory Government? Can a Scotsman not live in Bath now? I voted Mebyon Kernow while living in Bristol, is that illegal?

  • global city

    Tim comes across nowadays on TV like one of those tremulous voiced uberliberal vicars……. he is quite and arse now, though I do actually agree with his points in this piece!

  • ohforheavensake

    Tim- you do know that this argument could have been made by Piketty himself (he’s not a part of the far left, by the way).

    • Kin62

      Read Keynes. He loved Victorian capitalism and the glorious things it produced, but realised that it had to be managed to keep producing the goods. He was right in 1934 or whenever, and he’s right now.

  • smoke me a kipper

    Tim, you’re beginning to sound a bit like a socialist, greed is good don’t you know!

    • Geo

      Nobody believes that. Greed is not good, but it isn’t criminal.

  • Skyeward

    Great article except the idea of right/left seems a poor fit. Neo-liberals can be found amongst Democrats, Republicans, Labour, Tory and the SNP (how is it they’ve fooled so many on that score?)

  • ArtieHarris

    Tim: That was a really good piece.

  • Maureen Fisher

    “I’m glad the anti-capitalist movements are failing.” This doesn’t seem to have had any effect on the delusional Marxist types. I discuss politics regularly with some of them and the current line they are trotting (excuse the pun) out is that Tsipras “capitulated.” No doubt they will say the same about Corbyn when he gives up.

    • MrJones

      The asset stripping of Greece will continue to throw up resistance and each time the vultures will try and buy the leadership and each time they succeed the process will restart.

      It will only end when Greece is bled dry or they get a leader who can’t be bought.

      • Yvonne Stuart-Hargreaves

        Impossible in Greece. Everyone can be bought.

  • Erebus Black

    Inequality is not a bad thing and should not be a concern at all. Apart from removing regulation that allow corporations to benefit the only way to get equality is by forcibly taking it from others.

    Corporate greed is not a problem in a free market system as rivals can offer a better service and lower prices. However this not the case absent of a free market where corporations benefit from regulations, minimum wage laws and intellectual property laws.

    The belief that the state can improve society but intervening in the economy is the biggest threat to free market capitalism.

    • Yvonne Stuart-Hargreaves

      Free market capitalism needs a few threats to civilise it.

      • Tim Morgan

        True – and it also needs the state. Without the state, capitalism can turn monopolistic and dishonest. Too much of this and it will be overthrown anyway.

        In fact, the state has to save capitalism from itself. The idea that capitalism is a sort of free-for-all, law-of-the-jungle system is on a par with survivalism. Even Ayn Rand – the ultimate advocate of no state – ended up living on Social Security.

        • Geo

          Depends how much of a state you want. Most free-market capitalists want a state, just not one that tries to direct economic activity.

          • Tim Morgan

            Fine. But I question how keen some – stress “some” – self-claimed free market capitalists are on a state that prevents monopoly, oligopoly, and cheating.
            I raise this because I’m reaching the view that Britain’s biggest deficit isn’t fiscal, or current account.
            Rather, it’s an integrity deficit.

      • Erebus Black

        No it doesn’t.

        Voluntary transactions among consenting adults are precisely what is civil.

        Using violence or threats of violence to interfere in freely made transactions is uncivil.

        • red2black

          Even in criminal ones?

          • Erebus Black

            Well genuine crimes have victims.
            I assume you meaning things like drug trades which can be perfectly civil.

            Throwing people in jail for peaceful transactions isn’t very civilised to me.

          • red2black

            That’s not what they get thrown in jail for, but a peaceful transaction may well be part of the process of them ending up there.

          • Erebus Black

            Could be said for alcohol and many other legal substances as well.

          • red2black

            Of course. Like with most things, there isn’t some sort of polarised divide.

    • MrJones

      Too much inequality is a bad thing (in a purely practical sense) because it distorts demand.

      If you have a society with a large middle class which then changes to one with a mass of poor and a few rich then demand within the economy transforms and *contracts*.

      .

      Corporate greed is very much a problem in a free market system because despite their spin corporate greed is what drives government regulation in their favour.

  • Tim Morgan

    Tim

    The big enemy of market capitalism isn’t half-baked socialism. We worry about Corbyn when the real risk would be another Blair.
    The big enemy of capitalism is corporatism.

    We see private sector corporatism when businesses resist competition and transparency. We see public sector corporatism when no senior heads roll after disasters like Stafford and Rotherham. We see apologists for corporatism when fraud is passed off as mere “miss-selling”, as if it was just an oversight, not a con. We see corporatism when erring banks’ shareholders are fined, but the individuals actually responsible get away scot-free.

    Corporatism instinctively steals capitalism’s clothing – not just in the private sector, but in government, too, when it calls us “customers”, calls town clerks “chief executives”, introduces fatuous “internal markets”, and imposes gagging contracts to hide the truth.
    Finally, we see corporatism in the NHS, with the failed fragmentation of the service into “Trusts”, each with its own highly-paid management cadre.
    If capitalism is keep public support, capitalists need to distance themselves from corporatism

    • Geo

      Correct. But socialists don’t want to accept that the free market and what we have now are quite different things – it suits them to tell people that this is the inevitable result of free market capitalism, when all it is is corrupt politicians.

      • Tim Morgan

        Quite so. I don’t see much distinction between the corporatist state and the corporatist public sector.

      • Peter Turner

        “it suits them to tell people that this is the inevitable result of free market capitalism”

        Not inevitable, just relentlessly supported by empirical evidence.

        • Geo

          No it isn’t.

          Empirical evidence observes “what is”. We have corporatism, that is true. But to say that that’s where free markets lead is rubbish, because properly free markets haven’t been tried in earnest.

          Corrupt politicians use free-market rhetoric to mask corporate welfare. Socialists willfully believe them, because then they can point out that all free-market supporters want corporate welfare, when that isn’t the case.

  • https://sites.google.com/site/deanjackson60/home Dean Jackson

    “The first is a belief that we’re all moving forward in some way or other. Not necessarily all at the same pace but at least in roughly the same direction. The second is that there aren’t some people enjoying a special protected status. There needs to be a belief that the poor can get richer and, often forgotten, that the rich can get poorer.”

    That’s precisely why the Marxist co-opted political parties of the West are following the same central bank low interest rates economic sabotage policies, whereby new productive businesses that depend on loans for startup are prevented from forming, since the expected profit, which is based on the ludicrously low central banks’ interest rates, is too low to cover the relatively large capital outlay for such businesses.

    Economist and author Phil Mullan discusses the crisis of productivity in the West, pretending he doesn’t know what’s causing the West’s productivity drain…

    http://www.spiked-online.com/newsite/article/we-need-a-new-industrial-revolution/17225#.VdeWXSVViko

    All the major central banks (Federal Reserve, Bank of England, European Central Bank, and Bank of Japan) are following the same low interest rates economic sabotage policy, effectively (1) on the supply side, preventing capital formation for new highly capitalized business ventures that depend on loans for start up, since the interest rate on the loan, as ultimately determined by a central bank’s interest rates, is too low to cover the large capital expenditure; and (2) on the demand side, there can be no demand for the commodities from such aforementioned investments, because people aren’t saving for such long-term investments, because the lure for such investments, higher, market-based, interest rates are non-existent, thanks to central banks’ low interest rate policies; this is where recession/depressions make their appearance, since there is no demand for the mis-allocated central bank induced fake “investments”.

    The deleterious effects of low interest rates are apparent to those who rely on interest payment dividends from a Certificate of Deposit to supplement a major proportion of every day living expenses. As the interest rate declines on longer maturing CDs to abysmally low levels, many are forced out of CDs because the dividend of the longer maturing CD is no longer covering the living expenses it once did, and consumers need the principal now. Others transfer to shorter maturity CDs, just in case the principal is needed.

    This results in less capital available for business projects that require relatively longer time periods to begin to pay back bank loans.

    This sabotage policy is directed by Marxists within the central banks, who are placed into their positions at the central banks by their Marxist co-opted political parties.*

    The following is a discovery I made in May regarding the fake collapse of the USSR…

    When Soviet citizens were liberated from 74 years of Marxist horror on December 26, 1991 there were ZERO celebrations throughout the USSR, proving (1) the “collapse” of the USSR was a strategic ruse; and (2) the political parties of the West were already co-opted by Marxists, otherwise the USSR (and East Bloc nations) couldn’t have gotten away with the ruse.

    In fact, there would have been no though of even attempting such a ruse in the first place, since its failure was guaranteed, UNLESS the political parties of the West were already co-opted by Marxists.

    The West will form new political parties where candidates are vetted for Marxist ideology, the use of the polygraph to be an important tool for such vetting. Then the West can finally liberate the globe of vanguard Communism.

    For more on this discovery, see my blog…

    https://sites.google.com/site/deanjackson60/home

    ————————–

    *The failed socialist inspired and controlled pan-European revolutions that swept the continent in 1848 thought Marxists and socialists a powerful lesson, that lesson being they couldn’t win overtly, so they adopted the tactic of infiltration of the West’s political parties/institutions. In the case of the United States…(continue reading at DNotice)…

    https://sites.google.com/site/deanjackson60/now-you-see-me-now-you-don-t

    Now you know why not one political party in the West requested verification of the collapse of the USSR, and the media failed to alert your attention to this fact, including the “alternative” media. When determining whether the “former” USSR is complying with arms control treaties, what does the United States do to confirm compliance? Right, the United States sends into the “former” USSR investigative teams to VERIFY compliance, yet when it’s the fate of the West that’s at stake should the collapse of the USSR be a ruse, what does the United States do to confirm the collapse? Nothing!

    The fraudulent “collapse” of the USSR (and East Bloc) couldn’t have been pulled off until both political parties in the United States (and political parties elsewhere in the West) were co-opted by Marxists, which explains why verification of the “collapse” was never undertaken by the West, such verification being (1) a natural administrative procedure (since the USSR wasn’t occupied by Western military forces); and (2) necessary for the survival of the West. Recall President Reagan’s favorite phrase, “Trust, but verify”.

    It gets worse–the “freed” Soviets and West also never (1) de-Communized the Soviet Armed Forces of its Communist Party officer corps, which was 90% officered by Communist Party members; and (2) arrested/de-mobilized the 6-million vigilantes that assisted the Soviet Union’s Ministry of the Interior and police control the populations of the larger cities during the period of “Perestroika” (1986-1991)!

    There can be no collapse of the USSR (or East Bloc nations) without…

    Verification, De-Communization and De-mobilization.

    The West never verified the collapse of the USSR because no collapse occurred, since if a real collapse had occurred the West would have verified it, since the survival of the West depends on verification. Conversely, this proves that the political parties of the West were co-opted by Marxists long before the fraudulent collapse of the USSR, since the survival of the West depends on verification.

    The above means that the so-called “War on Terror” is an operation being carried out by the Marxist co-opted governments of the West in alliance with the USSR and other Communist nations, the purpose being to (1) destroy the prominence of the West in the eyes of the world, where the West is seen (i) invading nations without cause; (ii) causing chaos around the globe; and (iii) killing over one-million civilians and boasting of torture; (2) close off non-Russian supplies of oil for export, thereby increasing the price of oil, the higher price allowing oil exporting Russia to maintain economic stability while she modernizes and increases her military forces; (3) destroy the United States Armed Forces via the never-ending “War on Terror”; the ultimate purpose of the aforementioned to (4) bring about the demise of the United States in the world, opening up a political void to be filled by a new pan-national entity composed of Europe and Russia (replacing the European Union), a union “From the Atlantic to Vladivostok”; which will (5) see the end of NATO.

    Now you know how Bolshevik Russia survived in 1917; how the West “lost” China to the Communists in 1949; why the Eisenhower administration turned a deaf ear to the anti-Communist Hungarian uprising in 1956; why the Eisenhower administration in 1959 was indifferent to the Castro brothers’ Communist fidelity, actually used the CIA to overthrow the Batista government; why the Nixon administration abandoned Taiwan for Communist China, and signed treaties/provided economic aid to the USSR; why the Nixon administration refused to tell the American People that over 50% of North Vietnamese NVA regiments were actually Chinese People’s Liberation Army soldiers (attired in NVA uniforms, and proving that the Sino/Soviet Split was a ruse, as KGB defector Major Anatoliy Golitsyn told the West back in 1962), thereby (1) ensuring the Vietnam War would be lost; (2) destroying the prominence of the United States abroad and at home; (3) breeding distrust between the American people and their government; and (4) securing Communist victories in Southeast Asia. Working in the background within the political parties of the United States and Great Britain were Marxist agents doing their best to (1) ensure the survival of Communist nations when they popped up; and (2) sabotage any policies that would bring down a Communist nation. That’s why after the fake collapses of the East Bloc nations and USSR there was no mandatory Western verification process to ensure the Communists weren’t still in control.

    • MrJones

      You’re right that ZIRP is killing growth but it’s not Marxist sabotage.

      ZIRP has kept house prices up which protected the banks from the trillions in toxic mortgage debt they were holding.

      QE involves transferring that toxic mortgage debt from the banks onto the public.

      When all of that toxic debt has been transferred from the banks to the public the interest rates can go up again because by then it will be the public who pay the price of the banks’ gambling and not the banks.

      • https://sites.google.com/site/deanjackson60/home Dean Jackson

        “When all of that toxic debt has been transferred from the banks to the public the interest rates can go up again because by then it will be the public who pay the price of the banks’ gambling and not the banks.”

        There can be no buying of those toxic assets by the public (for the most case) until the economy revives, which means raising interest rates, which will have the effect of actually rising house prices as new buyers come on the market due to the improving condition of the economy.* Continued low interest rates, which caused the over-buying of homes, will compound housing toxic assets by adding to them when then next central bank low interest rate orchestrated collapse occurs.
        —————————
        * The purchases will be based on actual demand by consumers for the houses, not the central bank, low interest rates, artificial supply-side demand that gave us the toxic mortgage crisis in the first place.

  • andylowings

    How the BBC reports the prevention of a possible 200 deaths by a Moroccan AK47- wielding terrorist.
    “AMERICANS subdue FRENCH train gunman” ( my capitals).

  • sidor

    Capitalism is a Marxist concept. Therefore, anyone using this term is a Marxist. There are crowds of these in the political right wing praising Capitalism as a climax of human civilisation. These people are really dogmatic and fail to see that the 19th century economic reality doesn’t exist anymore. This is turning into a serious trouble as ideology overwhelms reality and common sense.

    • red2black

      Adam Smith. Marx gets blamed when things go tits up.

      • sidor

        You don’t know what is capitalism, do you? That is what you have in common with Ricardo and Smith. But in contrast to them, you have an opportunity to learn that part of political economy. Do it.

        • red2black

          Sorry; it’s a copy and paste: ‘an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state.’
          I’m not sure about ‘rather than by the state’, but there you go.

          • sidor

            That means that capitalism existed in China 2500 years ago.

            Stop reading and coping rubbish. It is detrimental for your mind.

          • red2black

            Some suggested reading, then?

          • sidor

            Ask Soros. He must know.

          • red2black

            Thanks for that.

          • sidor

            Try this:

            https://www.marxists.org/archive/kautsky/1903/economic/index.htm

            It is short and clear. Marx is unreadable.

          • red2black

            I’d say it’s hard work, having only read a few pages of Capital when I was young.

    • Alastair Houghton

      Sorry, but you are dead wrong. The word “capitalism”, used in the modern sense, dates to 1850, some 17 years before Marx wrote Das Kapital, and its counterpart, “capitalist” was used as far back as 1633. Capitalism itself is not and never has been a Marxist concept.

      • sidor

        Assuming you are dead right. Could you please provide us with a reference to a study in political economy where a comprehensive definition of capitalism as a form of market economy was given before Marx? If you cant, don’t hesitate to admit that sad fact.

        • Alastair Houghton

          The most likely candidate — using capitalism in the modern sense — is Louis Blanc’s Organisation du Travail, which, like Marx’s work, is anti-capitalist in tone. Marx, by the way, only uses the word “capitalism” two or three times in the whole of Das Kapital, preferring instead to talk of the “capitalist” and the “capitalist mode of production”, so would be an unlikely source for the word.

          However, the root of your confusion appears to be the fact that you have conflated the word and the concept, as if there was no money before the coining of the word (13th century, before anyone asks).

          • sidor

            I am afraid you are linguistically confused. “Capitalist mode of production” introduced by Marx is what is called capitalism in political economy.

            I am still waiting for your reference to an (academical) study in political economy where this type of market economy has been described before Marx as you claimed. Please avoid referring to unintelligible demagoguery commonly produced by journalists and revolutionaries.

          • Alastair Houghton

            Blanc (whose work I cited as an example) was neither a journalist nor a revolutionary. Nor was Ricardo (On the Principles of Political Economy and Taxation, 1817), for instance.

            The fact is that there are plenty of descriptions of the behaviour of capitalists that predate Marx — and that use the word “capitalist” in their description — and one can distil from any one of these the essential features of capitalism. Indeed, since Marx didn’t actually define capitalism at any point in Das Kapital, you have to do very much the same thing to arrive at a definition of capitalism from that text.

            It’s perhaps even more ironic to argue that capitalism is a Marxist concept when you consider that even dedicated Marxists don’t actually agree on what features a society should have in order to be considered capitalist in nature — e.g. a fair number contend that capitalism is really about the subjugation of a wage-earning class and that notions of ownership are irrelevant.

          • sidor

            Let me repeat the question:

            I am still waiting for your reference to an (academic) study in political economy where this type of market economy has been described before Marx as you claimed.

            If you aren’t aware of such a study, don’t hesitate to indicate this.

            And another relevant question: do you know what is capitalist economy?

          • Alastair Houghton

            I’ve already given you two such examples — they are not the only ones. That you don’t consider Blanc or Ricardo sufficiently “academic” is your problem, not mine. If you’d like more examples, kindly use Google or visit your local university’s economics department who will, I’m sure, be pleased to assist.

          • sidor

            You didn’t get it. Could you please quote, textually, Ricardo’s definition of Capitalism, with reference? If you can’t, don’t hesitate to admit it. Thank you.

          • Alastair Houghton

            Why should we apply a different standard to Ricardo (or any other author) than that we apply to Marx? Marx doesn’t define capitalism in Das Kapital, certainly not succinctly in a manner that one could quote.

          • sidor

            Let’s make it simple.

            1. What is your definition of Capitalism as a form of economy?

            2. Where did you take it from (reference with citation)?

            By your answering or failing to answer these two trivial questions we can resolve the discussion.

          • Alastair Houghton

            They’re good questions, but since we’ve already established that the answer to 2 cannot be Marx (since he never actually defined it), I think the discussion is over already.

          • sidor

            In summary:

            1. You cannot explain what you are talking about when discussing capitalism as an economic system.

            2. Consequently, you don’t know who gave the definition of capitalism as an economic system that you don’t know.

            Anything else you wanted to say?

          • Alastair Houghton

            No, in summary, you want me to provide a definition of Capitalism (irrelevant — my point is that it is not a Marxist concept), and demand that I provide a reference with citation, which you yourself cannot do to back up your assertion that capitalism is a Marxist concept because Marx doesn’t define capitalism.

            Basically, you’re arguing that you should be allowed merely to assert that capitalism is a Marxist concept while I must somehow prove it isn’t by providing reference to a definition published prior to Das Kapital.

            Such an argument doesn’t hold water, sorry.

          • sidor

            You must know what you are talking about. Unless you provide us with your definition of capitalism, all your texts are thoroughly meaningless.

  • MrJones

    “The past 30 years have been correctly described as the greatest economic event in global history. ”

    It seems so but it really isn’t.

    The key point to realize is 90% of globalization is oligarchs moving *production for the western market* overseas.

    It’s not those countries developing their own domestic demand; it’s them supplying demand that exists elsewhere.

    But how can the West still maintain the same level of demand if tens of millions of 20K a year factory jobs were off-shored plus the tens of millions more those jobs supported in the service sector?

    Debt.

    It’s all hanging by a thread of debt.

    So yes in the 30-40 years the West’s credit rating allowed the globalization scam to run, millions of people in the 3rd world got those off-shored factory jobs and even when only paid 2K that pulled them up while the huge drop in demand in the West from losing tens of millions of 20K jobs was covered by debt.

    While the scam lasted the oligarchs could pocket the difference between the 2K and the 20K.

    But it could never last and it is crumbling now.

  • jeffersonian

    Capitalism’s most dangerous enemies are false friends like Tim Montgomerie and his ilk.

    • tolpuddle1

      Capitalism has no real friends. At least, none with brains.

      Capitalists love only themselves.

      • jeffersonian

        Oh bless. Did no-one love you?

      • mohdanga

        As opposed to those altruistic socialists and communists who have done wonders for the world.

        • tolpuddle1

          Moderate socialism, as opposed to Marxism, has done wonders for the world.

          • Kin62

            Capitalism, with some of fruits siphoned by government in order to enable everybody to share in capitalism, has done wonders for the world.

            Easier said than done, though…

  • hupp

    Stage one: ……..Admit there is a problem.

    Stage two: ………When you get to stage two, then you’ll see it differently. For a start, socialism means lots of different things so you won’t be bringing up examples of those bad “socialists”. Rather, you’ll be comparing their failures to implement socialism because they declared “socialism is government” which is not socialism at all.

    Stage three: ……When you get to stage three, you’ll realise that “government socialism” must get preference over capitalism for individuals and business. There things would have a possibility to rest. High top tax rate, high amount of services with the caveat that society comes first.

    Capitalism creates profits before people as a default.

    FFS, capitalism has created, destroy the whole world for profit, by default.

    Capitalism needs regulated, as society and that “socialism” is far more important. Each to his needs is a good ideology, especially for the basic standard. And if you accept the USA and UK are nearly half “government socialist” (welfare states) then you can easily accept the final push to make sure capitalism can never take precedence over our societies needs.

    The only hope for capitalism is a type of government socialism… our existing welfare systems are proof of that. But as you sorta say, the right wingers are destroying that only hope.

  • jonnm

    The Harper government has to be put in perspective. It has won one majority government and that with less than 40% of the vote, the rest of the vote has always been to the left split between 4 parties.

    • mohdanga

      A typical argument of lefties. When Jean Chretien won three majorities, all of which were around the 40% mark, it was ‘democracy has spoken’. When the Conservatives win, something is wrong with the system.

      • jonnm

        Typical right winger, the conservatives at their best got slightly less than 40% once, the rest were minorities. The other parties running against them were all left of centre. shows the popularity of right wing ideology in the country.

        • mohdanga

          So when the system operates as designed, ie. the party with the most seats forms the gov’t, it is somehow not legitimate when the Conservatives win? Why don’t you brilliant lefties merge parties in order to defeat the Conservatives? Could it be because Liberal policies are different from the NDP?
          The system has been the same since Confederation and all those years that the Liberals were winning majorities with not a seat to the west of Ontario were representative of the country as well, no?

          • jonnm

            The discussion wasn’t whether the conservatives have a legitimate mandate to govern but whether conservativism and right wing ideology represents a majority of the beliefs of the country as a whole. Incidentally the British and Canadian Parliamentary system was not designed it evolved. In regard to the west first of all each province have distinctive voting patterns. Primarily you seem to be talking about Alberta which has had right wing to conservative governments for much of its history, so right wing in fact that the provincial government invited British fascists to help form policy in the 30s. Later they had the premier preaching evangelism on radio while governing. Most other provinces have varied considerably over time in their voting patterns. The current NDP government got in due to a split between right wingers and Conservatives. I will admit however the current mayor of Calgary is breaking those stereotypes. If the right wingers and developers manage to kick him out please sent him to us. We could give Rob and brother Doug Ford, both good right wingers in trade. While your at it you could sent us either hockey for the leafs. Actually that won’t work since leafs fans are masochists.

  • evad666

    You overlook the lefts love affair with its islamist brown shirts.

  • Sean L

    The concept of *capitalism* was invented by Karl Marx, idealising the economic arrangements of his time in support of his theory of class conflict and economic development. But one might just as validly define our current arrangements, for all their resemblance to the 19th century model, by its ideal opposite: *socialism*. Thus as our economic arrangements, our mode of production, have changed, so has capitalism’s explanatory value diminished.

    But even to define a society solely by reference to its economic arrangements is itsekf Marxist in character, presupposing a theory of economic determinism: that a society is reducible to, and ultimately explicable through, its productive forces. Doubtless it is to some degree. But no one would measure the value of a family say solely in relation to its material wealth. We’d typically refer to the relationships of its members, their relative harmony or discontent, their loyalties to each other and the family as a whole: the factors that define it *as* a family in all but name.

    And however these might be intertwined with their wealth, or want of it, the value of the family unit would never be determined by economic criteria to the exclusion of all other factors. Thus the former Member for Wolverhampton replying to Margaret Thatcher’s claim that the Falklands War was fought in defence of “British values”: ” I’d fight for this country even if it was communist” he said.

    Because the primary political value for him was allegiance. For without a common allegiance among its members a society is bound to splinter and its economic arrangements come asunder anyway. The point of politics, certainly for a conservative, was to avert that calamity given that a society is bound to be a fragile entity threatened from without as much as within in the course of its existence. The merits of its economic arrangements were to be judged in relation to the enduring maintenance of the society, not merely the bank balances of its members at any particular moment in time.

  • tolpuddle1

    “The characteristic vices of the Right are arrogance and contempt.”

    As long as the supporters of Capitalism are purse-proud and swollen-headed – and possessed by the notion that they are better than those beneath them in the pecking order – Capitalism will never want for bitter enemies.

    The trouble with the greedy nonentities who dominate our society is that they are Put Down merchants – ergo, hated and despised.

    Nonentities ? Yes, because when a tycoon, CEO or hedge-fund boss falls off the perch, they are soon forgotten (why should anyone bother to remember them ?) and the system continues exactly as before.

  • tolpuddle1

    Mrs Thatcher turned Britain from a pro-underdog country, into one that worships Money and Success (and those who possess them).

    One result – terminal social division.

    The American hatred and contempt for the poor have taken firm root in Britain, a country now as corrupt, cruel, greedy (and doomed) as the USA it is modelled upon.

    • Geo

      Pro-underdog apparently means economic stagnation and punishment of the successful.

      • tolpuddle1

        You don’t have to punish anybody, since North Korea and Social Darwinism aren’t the only two possibilities open to humanity.

        Only fools and liars say they are.

        As for economic stagnation – despite the ballyhoo to the contrary, the British and American economies are pretty stagnant and insecure (in addition to Britain and USA being bankrupt, and in steep decline).

        • Geo

          I’m not in favour of North Korea, punishment of the wealthy or Social Darwinism.

  • Maureen Matthew

    The British media love to cite Canadian examples but i really don’t think they know what the examples mean. The Alberta government that got booted hadn’t been on the right for over 25 years. Redford was elected by teacher’s unions. As for the federal NDP, Harper hasn’t even begun to target them, he is taking Trudeau Jr. To the cleaners and with over 7 WEEKS left in the campaign and more money than both opposition parties combined, the campaign hasn’t even started. The MSM is all over the NDP because that is their natural home, but it doesn’t actually mean much.

  • ArashUK

    another article showing that most so-called right wing even does not what is free market system. This section is a disgrace for a so-called free market fan:

    “This might help to explain why the party has done so little to reduce the UK economy’s dependence on financial services. And what about the fact that chief executives earn 183 times as much as the average worker — as we learnt this week? Is this the free market working as it should or are we witnessing a massive failure of corporate governance?”

    Dear Tim, it is not the job of the state to change the economic direction or sector. England has been a merchant country for centuries and it was not because of the state. In a free market state should not intervene in economic matters and now British state is intervening in almost all business sectors and insulting bankers become something fashionable whereas they at least create wealth but what about politically biased charities which all are subsidised by the state?

    Also, the fact that a CEO earn 10000 times a simple worker is none of state business. it is up to its shareholders and the employees. It is not the state’s job to decide how much salary is enough. It also shows you dont have any idea of how hard is managing a big business. It is definitely harder than writing this statist article and pretending to be a capitalist!!!

    The best thing an state can do in a free market is doing nothing. If you dont agree with that at least do not call yourself capitalist, fan of free market, right wing or anything. It is a fallacy of our age that communists call themselves capitalist and totalitarians call themselves liberal!!!

  • MrJones

    Told you so.

  • Kin62

    This is a very interesting article written by one of the most thoughtful writers going. I myself was brought up in a family of lower-middle-class people from the provinces. My ancestry is small businessman after small businessman with numerous people who have risen from humble backgrounds to do well in the professions. Nobody in my family, as far as I know, has ever joined a trade union or worked for the public sector.

    I have nothing in common with the leftie attitude, which is to consider oneself a victim, to sneer, to denigrate, and to want to bring things down to the lowest level. Lefties are the sort of people who think virtue is only attainable by travelling on a bus, wearing boring clothes, and smelling bad. This is absurd. I am the sort of person who sees a big house or a nice car and think,
    “what a nice thing. It is good that such a nice thing has been created
    and that people can enjoy it”. To give an example, I recently visited
    the Scottish stately home, Mount Stuart, built by a fantastically wealthy
    peer. It is glorious, a thing of sheer beauty. The world is enhanced by
    having such things about

    But if I am to have these nice things, I need money- and therin lies the problem. The economy is so skewed against employees, and the housing market, in particular, so skewed in favour of existing homeowners, that unless one is born into privilige one cannot realistically attain a high standard of living. Tories used to talk about “a property-owning democracy”- not much sign of that happening. And while my heart doesn’t bleed for the poor, some people will always need to take the bus and live in a council flat; they deserve a decent standard of life.

    The present government are not merely complacency about this; they revel in it. This is why I, a natural Tory, have joiend the Labour Party, which is full of idiotic bigots, and may even vote for Jeremy Corbyn, who is a communist who supports the IRA. I’m past caring, and there are many others who are getting there. There’s a Biblical saying: “he that troubleth his own house shall inherit the wind, and the master shall be servant of the fool”.

  • Joseph Shmeau

    Reading this from Canada, where IMO your piece stands up well. You mentioned offshore money driving up real estate prices in London; we have this problem in a severe way in Vancouver and to a lesser extent Toronto. The only serious addition I would make to your argument is the problem of massive legal and illegal immigration to developed countries, which “pro-business” parties allow because it drives up aggregate growth and drives down wages, but is a negative for the majority of citizens. If responsible capitalist politicians don’t address this problem the electorates will eventually find someone who will.

  • Kin62

    Good article, Tim.

    Why do you support the present goverment, when its leaders are likely to laugh vigorously at everything you have just said?

  • The BBC Sucks BBCs

    What we’ve currently got is socialism for the rich & capitalism for the poor. A debt based fiat money system run largely by private banks that blackmail governments to force taxpayers to bail them out when they screw up. We need to look at money creation & state’s role in it with an eye to increasing competition & accountability.

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