Ed Miliband at the CBI: why we still need a responsible capitalism

The coalition has lost all interest in any sort of economic rebalancing in its dash for short-term growth.

The coalition has lost all interest in any sort of economic rebalancing in its dash for short-term growth

Notwithstanding the hot air this week surrounding Ed Miliband for ‘not looking prime-ministerial’, there is a real problem at the heart of his leadership: the inability to find a theme and stick to it.

Thus far we’ve had One Nation Labour, predistribution, responsible capitalism and the ‘cost of living crisis’.

Almost as soon as each of these ideas has been announced it’s been dropped. Labour’s fleeting attachment to each is evident in the fact that the public appears to have very little idea as to what any of it actually means – apart from the ‘cost of living crisis’ which – even worse – has now turned into a cliché.

In the same way the Conservatives have dropped all talk of rebalancing the economy in their dash for growth, Labour appears to have side-lined big ideas in favour of a handful of policy offerings.

And therein lies Ed’s problem: Labour has no big narrative as to how it plans to make Britain better. It all feels a bit ‘our cuts will be a little nicer than the Tory cuts’.

Considering Ed is speaking at the Confederation of British Industry today (CBI), it seems a pertinent time to ask: what happened to the responsible capitalism agenda?

The Berlin Wall commemorations this week should act as a reminder that capitalism is still the only show in town. That need not oblige one to accept utopian formulations about an ‘end of history’, but it does mean accepting the obvious: whether one favours social democracy or its neo-liberal counterpart there really isn’t another economic option on the table.

The Soviet Union fell because Mikhail Gorbachev tried to reform it. But Gorbachev tried to reform it because the Soviet economy was by the early 1980s bankrupt, just at today the economies of Cuba and North Korea are bankrupt. Economic planning could produce vast numbers of armaments, but it was unable to deal with the complexities of a modern economy anywhere near as well as the market.

With this in mind there are two options open to the left: to try and temper the neo-liberal settlement or to embrace the right’s free-market utopianism and seek to roll back the state even further.

Despite my striking a fairly pessimistic note thus far, all is not lost. Utopianism may have run out of road, but considering the damage it inflicted during the previous century that really isn’t such a bad thing. This is part of what makes Russell Brand’s ‘pitch’ so tedious: with his talk of ‘revolution’ he’s about a century too late. In future meaningful reform will be gradual, unglamorous and will require compromise – anathema to the adolescent mind-set.

On the back of the financial crash – a savage indictment of neo-liberal finance capitalism if ever there was one – Labour still has a real chance to make the case for a more responsible capitalism. The idea is a simple one: capitalism is the best system in terms of creating wealth but it also creates inequalities. The role of the state is to mitigate against that but also to ensure that business as well as the citizenry behave responsibly.

That means being anti-bad business, rather than anti-business. Against wild profiteering and burgeoning inequality, but not opposed to capitalism as an economic system.

It’s worth quoting a former director-general of the CBI, Sir Richard Lambert, on why both the neo-liberals and those who are nostalgic for some kind of state-dominated economy are wrong:

“We have learnt two big economic lessons over the past 30 years. The first is that markets do better than governments at increasing living standards. The Soviet empire was brought down by economic, not military, failure. China’s dramatic rise came about when its government let markets engage in its development. But markets can also get things badly wrong, as we saw in the banking crash. The second lesson is the need for responsibility in capitalism to justify the freedoms on which markets thrive. Key here is ‘sustainability’ – building businesses for the long term, rather than maximising today’s profits.”

This ought to encourage rather than breed despondency on the left. It confirms Miliband’s central argument: that the financial crash should have killed the blind adherence to Thatcherite dogma much as the fall of the Berlin Wall freed the left from its bondage to planning.

So while Ed will today focus on some of the micro economic issues – he will call it “a joyless [economic] recovery for so many because it is a pay-less recovery for so many: a recovery without wage growth” – he would do well to link it back to previous efforts to start a dialogue on responsible capitalism.

The coalition has lost all interest in any sort of economic rebalancing in its dash for short-term growth. But the issue isn’t going to go away. As this week’s Berlin Wall commemorations remind us, capitalism is the only show in town. Better, then, to focus on ensuring it works for the greatest number possible.

James Bloodworth is the editor of Left Foot Forward. Follow him on Twitter

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27 Responses to “Ed Miliband at the CBI: why we still need a responsible capitalism”

  1. Dan

    Very well said.

  2. RoyB

    Absolutely bang on. And Ed can call in aid all those from Richard Lambert to Janet Yellen against the mindless “anti-busines” argument which the Torieswill no doubt seek to deploy. Many of the most ardent supporters of capitalism are seriously worried about its survival if things continue as they are.

  3. robertcp

    The reality is that Labour has usually stood for responsible capitalism rather than socialism. A better type of capitalism was the achievement of the 1945-51 government.

  4. Leon Wolfeson

    “Responsible” Capitalism is an oxymoron.

    Capitalism is a gross distortion on the Free Market.

    And Labour does not plan to make things better, it plans Austerity, hence things will keep getting worse. Miliband is continuing with dogma to the RIGHT of Thatcher!

  5. Leon Wolfeson

    Not at all, they’re just working to curtail basic rights to keep it.

  6. madasafish

    Capitalism is dreadful. Every sixty to eighty years or so years or so it implodes and people are poorer.
    For a while.

    But look what it has achieved in the last fifty years…Does anyone claim that overall people are not richer than they were in 1964? Of course not.

    The Labour Party in power can’t agree how it;s going to co-exist with capitalism . The prior Government seemed to believe capitalism can be left to do what it likes (often because the regulation it imposed was expensively and breathtakingly incompetent).

    Remind me what alternatives there are to capitalism which work, are democratic and make citizens richer?

  7. Leon Wolfeson

    Capitalism in it’s modern form is a relatively new phenomena. The sort of casino-gambling which goes on with people’s money, on the present scale, and to the degree which it mitigates against worker’s incomes, is new.

    (Previously it was explicitly force-based top-down, and hence easier to see)

    Also your claim only holds “overall”. If you consider the middle class, or the poor, then there’s actually not been a decent increase in their living standards, especially since the mid-1970’s. Instead, we’re seeing families with two workers rather than the one of the 1960’s struggling.

    And that’d be the free market, with less capitalist distortion.

    * More mutual banks, building societies and credit unions.
    * Better regulation of anti-social business activity
    * Stopping discrimination against mutual/worker owned companies (i.e. in Government procurement rules)


  8. RoyB

    More to the point is that there are alternative models of capitalism that work much better than neoliberalism. The deregulated model that has prevailed since Thatcher has predictably collapsed. Markets have always needed regulation otherwise they tend to monopoly and politically unacceptable inequality. I do agree that there is no such thing as a perfect system and that it is a constant struggle, given imperfect old humanity, to keep those with power on the straight and narrow in the interests of all of us, them included! Just ask the remnants of the French aristocracy. As for “democratic” I don’t know what is particularly democratic about a society in which the interests of the wealthy are preferred against the interests of everyone else.

  9. madasafish

    Err most Mutual Building Societies acted like banks in the runup to 2008 and were taken over. See also the Co-Op Bank…

    Your comment about real wages falling from the 1970s is untrue.. see http://tinyurl.com/o73ycfs

    And for the rest,,, as you can’t get your facts right on basic items, you are not worth further discussion.

  10. madasafish

    “As for “democratic” I don’t know what is particularly democratic about a society in which the interests of the wealthy are preferred against the interests of everyone else”

    Life is unfair. Always has been . Always will be.

    Get used to it..Unless of course you think Soviet style democracy is great… and look what that achieved,

    And if you want to ensure the system is not biased towards the rich, persuade Tony Blair and other so called socialists to give some money away..and the Labour Party to stop awarding posts (MPs) to the sons and daughters of rich members – see Will Straw etc..

  11. Leon Wolfeson

    Ah yes, so because the government pushed Building Societies into becoming Banks…against the public interest. And then when they’re Banks, they ran into trouble.

    In fact, the Building Society/Co-Op sector took care of the small amount of trouble IT has in 2008 quite well. The Co-Op Bank is also *not* a mutual.

    …And a dead link, but of course you’re not using figures adjusted for inflation and cost of living.

    So, as I’m right, and you’re not, well, thanks for your view of yourself. I’ll remove the post to remove your amo.

  12. Guest

    Keep fighting those invisible socialists, as you demand those not as far right as you give away their cash.

    No surprise you say the poor must always suffer under your whip, etc.

  13. Leon Wolfeson

    Those are not called “capitalism”, for good reason.

    Neoliberalism IS Capitalism, to a large degree,

  14. RoyB

    Yawn. Tired old cliches do not constitute a discussion so I’m signing off here.

  15. RoyB

    I know that. Of course it is! What are you trying to tell me? It’s just an extreme version. There are many forms of capitalism, as I argue above, and we’ve had this particular variant thrust upon us the last 35 years, with the consequences that are all too evident now.

  16. Leon Wolfeson

    Er, no.

    What I am saying is that the alternatives are generally not called “capitalism”, and “varient” is a largely meaningless term, since there’s not really a non-neoliberal capitalism.

    I’m a Mutualist, a free-market anti-capitalist…

  17. RoyB

    I see what you mean, I just don’t agree! Obviously there can be markets without capitalism, but equally neo-liberalism is not the only form of capitalism. Anyway, I doubt we’ll get any further forward on this.

  18. Leon Wolfeson

    Well, there’s one clear route to advancing my understanding of your views there – what would you call non-neoliberal capitalism?

    (As in, the explicit term you would use)

  19. RoyB

    Try Keynesianism. But this is getting tedious. US capitalism has shifted from being paternalistic to atavistic. German capitalism is more Social Democratic. French is more statist. Japanese more subservient. They are all recognisably capitalist but in varying guises. I don’t think they all need to be “isms.”

  20. Leon Wolfeson

    I asked, and you can’t give me, a strong name for them because they are NOT distinct strands of economic thought!

    They’re all the same – they’re all Capitalism, and they are all pushing in the same direction.

  21. Leon Wolfeson

    Not really. They were not generally anti-free market…they BROKE a lot of rich men’s monopolies…

  22. RoyB

    Of course they are all capitalist. That’s what I am sayong. Where we disagree is that you want to call them all neo-liberal, whereas I think they are more distinctive than that and that to say that they are all the same is simply lazy thinking. The outcomes, in terms of social cohesion, equality, etc, are clearly different. Au revoir.

  23. Leon Wolfeson

    There’s no practical difference, no. It’s not lazy, it’s realistic – the systems you’re talking about are not in practice capitalist, they’re free-market, which is distinctly different.

    You’re trying to conflate them, which leads to Neoliberalism/Capitalism.

    You’re making excuses for Labour’s straight-line views on that as far as I can see.

  24. robertcp

    What are you saying not really about? Doesn’t breaking rich men’s monopolies result in a better type of capitalism?

  25. Leon Wolfeson

    Er? No, it hurts capitalism and helps the free market.

    There IS no better capitalism.

  26. robertcp

    Did the UK have a capitalist economy in the 1950s?

  27. David Davies

    For `responsible capitalism’ you would need to find an honest banker. I believe that one has been seen riding a unicorn, in Narnia.

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