Capitalism or Socialism. Is the choice really all that black and white? In this post I’ll explore the reasons behind why we ended up thinking in this unhelpful way. And why it’s important to adopt a much more pragmatic stance.
We thought we’d reached the end of history. The decisive triumph of free-market capitalism was the fall of the Berlin Wall. We were wrong. Since the financial crash of 2008, capitalism has become a dirty word. Most British people regard it as greedy, selfish and corrupt. And more sympathetic to socialism and favour renationalisation of the railways and utilities. It has got to the point where both the Prime Minister and the Chancellor feel compelled to give speeches. This system they say, has delivered vast wealth across the West. And it has also doubled living standards in the UK in 40 years.
A free market economy,” Theresa May said, “is the greatest agent of collective human progress ever created.
That a Tory PM should harp on that point, is a measure of how terrified she is that Jeremy Corbyn may be right. That his rejection of contemporary capitalism is the new mainstream. But he’s wrong, after all the British people haven’t embraced Karl Marx.
It’s not capitalism people have turned against, it’s the appalling way the Tories have handled it. The Conservative Party once took it as read that the way to keep voters true to capitalism was to allow them some share in its dividends. This made them feel part of a property-owning democracy. Yet the Thatcherite policies they’ve promoted since the 1980s have done the reverse:
- relentless privatisation,
- an austerity programme targeting the poor,
- home ownership has slumped to its lowest point in decades,
- share ownership among individuals is below where it was when Thatcher entered No. 10.,
- the average British worker earns less than he or she did before the financial crash.
- today’s 15- to 35-year-olds, could earn less over their lifetime than their parents did.
In summary, the Tories have defended capital rather than capitalism. But what we’ve experienced is far from anything resembling free-market capitalism.
Take housing as an example of a market that does not resemble the unregulated Wild West that Corbyn imagines our economy to be. It’s a market in which the Government builds houses, subsidises houses and taxes houses. It’s one in which it decides how many houses should be built and where. More often than not, it’s government rules and planning regulations, not the unbridled free market, that stops the supply of new houses.
That’s why there is something not quite right about this entire debate. Britain, like most affluent countries, has a mixed economy. May and Corbyn may differ about where the dividing line between state and market should fall. But their differences lie on a recognisable continuum. May says she wants a louder voice for workers in boardrooms. Corbyn is not calling for the nationalisation of the food supply. To talk as if the Tories are offering us capitalism and Labour socialism, is nothing short of stupid.
Photo on Foter.com