The new capitalism

Most paradigm shifts in politics are recognisable only in retrospect, but it’s fairly clear we’re living through one now. When you have the US seeking to nationalise $700bn of dodgy assets and the average British household now liable for £3,020 of Northern Rock debt something has changed. But what? I’ve been struggling to find a proper analysis of this, so it was great to read Irwin Stelzer’s meaty lecture to the Centre for Policy Studies where he says that, though free marketeers may hate it, a New Capitalism is now upon us. Here’s his take:- 

“You know that a revolution has succeeded when the opponents of change capitulate. Which is what has happened in America in the past several months: a conservative Republican President, a conservative central banker, and the former head of the most successful investment bank in the world combined to agree with capitalism’s left-leaning critics that fundamental change is required.  Game, set and match to the revolutionaries of the New Capitalism.”

1)      A reduction of the willingness of individuals and politicians to accept the risks inherent in the market system as it has been structured and as it has functioned until now

2)      The replacement of the bias in favour of deregulation that saw airlines, trucking, banking, electricity generation, natural gas production and other industries freed from pervasive (although not all) government controls, with one in favour of more regulation

3)      A refusal to accept any longer the market’s verdict as to how income and the fruits of economic growth should be distributed

4)      The rejection of the idea that the benefits of free trade are so obvious, and so widely distributed, that the post-World War II free-trading regime—its economic benefits notwithstanding—should be extended

5)      An insistence that the balance between considerations of economic efficiency and equity that has guided public policy since the end of World War II be changed, with equity considerations being given greater weight when coping with the increasingly powerful winds of change that are buffeting the US economy.
  The whole speech is worth printing out and reading. As I say in my piece for the current magazine, this comes at a sensitive time for Cameron. The gloablised world is spinning on its axis: will he follow the spirit of his recent FT interview and defend capitalism? Will he decide to embrace the era of New Capitalism? Or (worst of all) will he resurrect all that “social responsibility” stuff where he wants companies to be social actors and dress that up as his 21st century regulation? It’s a turning point, and Brown conspicuously failed to give a new analysis. Stelzer has his. And Cameron? We’ll see at 2.30pm next Wednesday.