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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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