They say that an economist is someone who has had human beings described to them but has never actually met one. In which case an Oxbridge economist must be someone who has had capitalism described to them but has never actually experienced it. One such is Oxford economist Sir Paul Collier, who in a recent book aims to instruct us on The Future Of Capitalism. It’s hard to figure why someone who’s never worked outside the state sector is qualified to pontificate on that subject. But having kissed the ring of Oxford, one is apparently entitled to deliver ex cathedra statements on any subject.
Collier has plenty of complaints about capitalism—or about what he thinks capitalism is—that should really be laid at the feet of state interventionism, of the sort that he favours. To him, 1945-70 was a ‘glorious period’ with the creation of the NHS, state welfare, etc., etc. No mention of the strikes, the crippling losses and dismal public service in the nationalised industries, the inflation, the dependency, the taxes, or the economic failure that threw us sobbing into the arms of the European Community.
To him, again, Milton Friedman’s rabid free-marketism, insisting that firms exist only to make profits, eroded the civic responsibility of companies, robbing managers of a social purpose and making them focused on short-term, selfish incentives rather than doing good; and globalisation has made businesses rootless, reducing their civic responsibility even more. No mention again of all the corporate law that drained power from business owners and, perversely, put it into the hands of executives—the ‘principal agent’ problem. No mention of the fact that these days, most businesses are small and SMEs deliver create most of our national product and employ most of our workers. They have a keen sense of responsibility to their community, suppliers, employees and customers. What gets in the way of that is state regulations telling them how to run their businesses and state taxes eating into their ability to generate wealth for all those groups.
London, thinks the prof, absorb too much of the national product; they should be taxed more so that capital is shifted to the regions. One reason for this spatial disparity, he suggests, is rent-seeking by the City and big business. No mention that the bigger the state has grown, the more opportunities for rent-seeking there are. No mention of the fact that the state itself is a centralising force—only praise for ‘state investment’. And that government towns, like London, never suffer economic downturns, but just grow and grow—at taxpayers’ expense.
As for benefits, Collier is shocked that the good old universal benefits created in the ‘glorious’ postwar period have become replaced by targeted benefits, and the idea of whether people deserve (and can benefit from) state help or not has been lost. No mention of the point that while Beveridge had a clear and quite liberal view on such subjects, the politicians who turned his blueprint into deliverable laws did not; nor that state welfare utterly eclipsed charities and friendly societies, working class welfare systems that were highly focused on delivering help to those who really needed it, rather than those who ticked bureaucratic boxes.
Yes, there are a lot of unjustifiable inequalities and unfairnesses around. But is more state intervention and ‘maternalism’ the answer? No, sadly it has been the cause.