Wednesday, 22 September 2010

Controlling capitalism

Vince Cable will make a speech today at the Lib Dem conference, says the Guardian, setting out clearly what he and the government plan to do to prevent another banking collapse and at the same time, prevent bankers and others in the financial services believing that their remuneration can escalate unchecked.  

It's often said that in the way that democracy is the least worst form of government, so capitalism is the least worst means of achieving relative prosperity for all.   And yet, the issues which are troubling Dr Cable now are not in any sense new.   My admiration (near worship actually) for all things John Lewis is hardly a secret so I think it's worth repeating the words of their founder, John Spedan Lewis reflecting on remuneration:-

"The present state of affairs is really a perversion of the proper working of capitalism. It is all wrong to have millionaires before you have ceased to have slums. Capitalism has done enormous good and suits human nature far too well to be given up as long as human nature remains the same. But the perversion has given us too unstable a society. Differences of reward must be large enough to induce people to do their best but the present differences are far too great.
"If we do not find some way of correcting that perversion of capitalism, our society will break down. We shall find ourselves back in some form of government without the consent of the governed, some form of police state.
"The dividends of some shareholders exceed their own highest hopes, hopes that may have been much too greedy, and the incomes of the more fortunate of the captains of industry are many times as great as would have caused the same persons to work just as hard and for just as many years if, instead of going into business, they had happened to become, say, lawyers or doctors. This is quite wrong."

He went on to build into the founding Partnership Trust deed an irrevocable ratio between the earnings of the lowest paid worker and the highest paid so that in his view, together with the co-ownership status of every employee or 'partner', there would remain an incentive to drive the business forward for the benefit of all.

Sadly not many other captains of industry see their duty to society as anything other than to make ever-increasing profit for their shareholders.  Pure unfettered capitalism after all, sees no social imperative.   Which is why I hope the Dr Cable's proposed regulations succeed.

1 comment: