Mr Cameron’s “Capitalism With a Conscience” is feeble

Posted by RDN under Economic affairs / Politics & campaigns on 31 January 2009

I am not an economist or a politician but I still feel confident in pointing out the silliness of my leader’s belief that capitalism must discover niceness.

Mr Cameron seems to be confusing government and business. David Cameron went to Davos and made the sort of speech that has been made there for a decade. That’s to say, he wants capitalists to look around at wider society, worry about it and save it. All very Steve Hilton.

The signs were there in the rhetorical trick of asking for “Popular Capitalism”. That’s to say: Mr Cameron says he admires Mrs Thatcher’s “Popular Capitalism” (the capitalism of popular or widespread ownership) and now he wants a more lovable – or popular – capitalism. Geddit?

I argue elsewhere that capitalists need professionalism not moralism.

For my part, I like capitalism the way I love Nature: for its being an extraordinary reality. Forceful. Vigorous. Productive. Something to work with. This is love which is closer to admiration and awe than to pop song triteness.

The speech was at its silliest when it suggested that capitalism must address inquality.

How to achieve that? Firms might aim to give their profits to the poor, but would that mean they didn’t invest in keeping up with the competition? Firms’ bosses might give their wages to the poor, and that would be an act of personal kindness which has nothing to do with capitalism (except that capitalism gave them the riches with which to display largesse). This was the trick Boris Johnson suggested as he deftly put some loyal blue water between his position and the leader’s.

The mistake here is to confuse economics with politics. If we are worried by inequality locally or globally, then politicians have some difficult decisions to make. They’d have to decide how they wanted to shape capitalism without scuppering the economy.

Politicians do this every day. It is a good half of their profession.

After all, “the market” is an idea or an ideal much more than it is a reality. Politicians have their hands on far too many levers of power for any market to be called free. That’s a good thing probably, but it’s no good pretending that we’re not in a social market.

So we can sensibly leave politicians to “tame”, or “civilise”, or “harnass” markets. But it is absurd to expect capitalists to do politics. They have no mandate to do it, for a start. And then there’s always turkeys and Christmas. If Mr Cameron wants British capitalism to produce something Scandinavian or Continental, that’s his business. But it will be for him to get Parliament to send those signals. For all I know, businesses will respond well and we’ll wake up in a new world.

Meanwhile, businesses are working out how to put their greed back to work. For years, they had too little fear and now – arguably – they have too much. As Olivier Blanchard of the IMF sort of said in The Economist, prudence in extremes becomes paralysis.

Meanwhile, and I don’t blame him, Mr Cameron has not been doing much serious work. Even if Matthew Parris thinks he should, Mr Cameron won’t really tell us where he thinks Mr Brown has gone wrong, or how much, and won’t say in any serious detail what the Tories would be doing instead.

That may be because Mr Cameron actually believes that the best thing for a debt-laden country to do in a recession is – dammit – not much.

Whatever. We know more certainly that Mr Cameron likes to parade his conscience and may rightly believe that such cosy talk is a real vote-winner if you are the Nasty Party.

All in all then, Mr Cameron is emphasising niceness too much. That may be the PR in him. It may be the canny politician. But it isn’t doing much for the quality of public discourse.

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