What Alternative is There?

Recently talking to quite a left wing person I made a negative comment about capitalism. His response was slightly surprising, “but what other option is there”.

I wasn’t quick enough to give a response there and then. But thinking about it, I think I would have responded as follows…..

By criticising capitalism I’m not suggesting that our options are what we have or communism. I don’t believe that that’s our only choice. But I do believe that we currently live with a version capitalism that’s become perverted.

This is not a new phenomena. We haven’t lived through the whole of history developing this system of buying and selling things and it’s remained a wide eyed innocent only for it to become perverted in 2020s. It’s always been subject to the swings of the pendulum as I have talked about in earlier blogs here.

The competing forces within capitalism, maybe the forces that give it its strength, also give it its weaknesses. I see them as, the ability to take risks, the ability to make money, the ability to work hard and make money. The ability to work hard and share in the wealth of the money making operation even if you’re a worker rather than just the owners of capital and the providers of labour.

Providing capital, working hard and making money are forces within capitalism. Sometimes the pendulum swings towards one side and the providers of capital and increases their reward, sometimes towards the workers and increases their reward.

The trouble is, as the forces compete and as the pendulum swings towards one or the other, change and correction is very difficult. It’s not easy to see the need for correction because they happen over generations and like the conversation I had at the start, to us, it just feels like how things are and how they’ve always been. It feels like there is no alternative.

This is totally not true. I am not a socialist. If being a capitalist makes you right wing, then we are all right wing. But that does not mean that the version of capitalism that we currently have, the one where the pendulum has swing towards the owners of capital and away from the workers is the only one available. The pendulum is always swinging and corrections to the version of capitalism have occurred before.

After the war, a version of capitalism was put in place which was state organised and very focused on workers. War is viewed as a public sector enterprise (even though there is good money to be made in it). Something that has to be ordered by a political leader. So state organisation was the dominant approach but also, one which the public viewed as having been successful in the end.

With 6 million dead Jews, millions of disabled, black and other minorities dead from persecution, and 80 million dead civilians and soldiers, across Europe and the British empire, and communism (centrally organised Government, basic freedoms lacking) fully established in the Soviet Union, an alternative was needed.

Given that the majority of dead people were not from the wealthiest 0.1% of the population, nor were they owners of capital, the change being demanded was clearly in favour of ensuring some rebalance and fairness towards this more working class end of the population who had just paid the price of delivering the end of the war.

The free market laissez-faire economics that was emerging in the 1920s had been shown to be spectacularly bad in the Great Depression of the 1930s. A new centrally organised version of capitalism gave the workers what they needed. A safety net for life’s economically challenging situations. So in the UK we got a basic state pension, free health care based on need rather than the ability to pay, unemployment benefits, universal free education to 16 and free University education. There were also controls on finance. Controls on the free movement of money and capital, controls on banks and financial transactions.

Clearly this is full of good intentions as well as imperfections. One imperfection being that to pay the pension of a 65 year old, taxpayers in 1947 had to pay tax to fund it for the year until the pensioner hit their average life expectancy age of 66 and died. And even then, it was only for men receiving it. Whereas in 2022, workers have to pay tax to fund the pensions of men and women until an average age of 88. Pensioners with complex and costly healthcare issues who pay nothing into the NHS (pensioners don’t pay National Insurance on their pensions) and who, on top of their free healthcare, don’t want to pay taxes for free University education anymore (the student pays, reducing their level of income instead) and who also want free social care as well, something that was never in the post war deal because those pensioners didn’t live long enough to need it, but which todays pensioners need and cannot afford and never paid for. Plus todays workers have to save for their own pension by law, (a further hidden additional tax) further reducing their levels of income. But all that is a different blog for another day.

Under this version of capitalism, the majority of working class people saw their situation improve over time. In addition to this, they could see that their children and grandchildrens situation would also improve over and above their own situation. People would be wealthier than the generations that went before them. And for this reason, there was good reason to work hard, have a family, and look after yourself and those around you. A decent ingredient for social fabric. This version of capitalism also led to an improvement in the economic situation of the poorest in society, as well as the richest.

The 1960 and !970s had a version of capitalism that today we’d call socialism. And to the left of today it is, but it’s still capitalism, it’s still to the right of communism. It still shows that pendulums swing within the same boundaries. Just because you call for adjustments to the pendulum swing doesn’t make you a communist any more than arguing for less socialist policies makes you a Nazi, although it seems to me that arguing for no Government regulation at all may make you greedy and ruthless.

But perhaps the pendulum had swung too far towards the workers. The energy providers at the time, the miners, were locked in a battle with the Government, inflation was out of control, workers were striking and the cost of living was spiraling upwards. The Government at the time had no answers and denied there was anything wrong prompting the Sun to write this famous headline:

Milton Friedman, an economist who in the 60’s and 70’s was a voice in the dark calling for neoliberal free market economist wasn’t one to miss the opportunity provided by a crisis and said:

“Only a crisis - actual or perceived - produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.”

And out of this crisis a new model of capitalism began. One which was modelled to rebalancing things towards the owners of capital and not the worker. But it will still a pendulum swing. The state was still needed, just in a shrunk form with less intervention.

And this new model of capitalism began well. I remember the Tell Sid campaigns that were selling British assets to British taxpayers. This was something my parents could benefit from. This seems to me to be a good version of capitalism. It turns each of us into mini capitalists where we all have a steak in the things we need in our day to day life. We want them to make a profit, but that profit flows to us. We spend that money locally. This is very different to profits being extracted from a British utility company and going to a Saudi Arabian sovereign wealth fund who owns it.

We were sold privatisation in the 80’s as a way in which these private companies could invest in the infrastructure so that they would become world class. Yet strangely, after 40 years, and with the highest paid CEOs in place, and huge dividends (something you get as a reward for business success I believe) being paid to foreign shareholders, our water companies have not fixed leaking pipes and waste 20million gallons of water a day, while telling us not to water our garden (as if that will somehow help). They have not invested in infrastructure which moves water from wet parts of the country to dry. And they dump millions of gallons of shit into our rivers and beaches. I cannot fathom how after 40 years of this supposedly great model of capitalism that this is actually still legal. I don’t know why it wasn’t put into law in 1980 saying that CEOs can pay what they want, and shareholders can take what they want, but if a gram of shit ends up in a river the CEOs will spend 10 years in prison in a cell without a working flush. I wonder what the divided payouts and bonuses would have been then.

Thatcher sold council houses to tenants. I think this was a good move and one which also turned us all into mini capitalists. The short coming was not replacing that stock and in later years allowing too many purchases of second homes, and far too much property being sold to foreign owners. Now banks see houses as cash points and the next generation will not own a home at all unless something is done. That is because the version of capitalism says that if a British tenant can afford to pay £1,000 a month rent, but a Chinese or Russian one can afford £1,500, then neoliberal capitalism says the choice is obvious. The British person needs to sleep on the streets. That is the system we have in place. I cannot recall anyone who voted for Thatcher voting for this system, and I do not believe that the majority of British people today think this is the system they want. But we have it because the pendulum is swinging still towards the 0.1% who are making money.

The version of capitalism we have today relies upon having a load of desperate workers to exploit. The EU used to facilitate this nicely because poorer member states had a load of workers who could move to the UK to exploit. This in turn forces UK workers to be less picky and also take a Deliveroo round earning £1 a delivery in addition to their full time job. Now that has dried up somewhat its no surprise that we see headlines from companies demanding that their industry has access to immigrant visas. Why pay a UK worker more and train them up REDUCING YOUR PROFITS when you can exploit foreign workers. The slave trade was clearly the best model for capitalism but someone spoilt that party for the 0.1% so instead they have to find milder way to exploit people whilst maximising their profit. We are in that model now. Next time we criticise a train driver for striking, lets just think who we are really helping.

Those pure neoliberal capitalists we see today, the likes of Jacob Rhys Mogg and John Redwood in the Tory party (but there will be others) the likes of Michael o’Leary of Ryan Air, James Dyson, plus pretty much all US tech billionaires who use the nice term libertarian as another way of saying ‘no Government’ who would even describe Thatcher as too interfering in the market. Any hedge fund and sovereign wealth fund. All of these people would see the NHS as deeply offensive as its Government intervention. They are market idealogues who beleive without a shred of evidence that markets will fix everything for everyone despite seeing during the Covid days Governments handing out cash to help stop people from starving to death. But in fact, this was also good for them, because the £billions did stop their resources from starving. They also took the Government hand outs and the rich got even richer. Never underestimate a good crisis!

Then Covid draws to an end and unfortunately, people aren’t as desperate as they could be. So new crisis arrives. War combined with a cost of living crisis. Energy companies looking on jealously at the handouts from Government and wanting a slice of the action, so they raise bills knowing that the Government will have to step in. Are they going out of business? Will they go out of business? No, not at all. They’re making record profits, and THAT is the version of capitalism we have today. Its almost too perfect. This version of capitalism needs people to exploit. That maximises profits.

The socialist capitalism of the 70’s may not have been perfect, but have we really improved? Whatever happened to the company who felt that serving needs of the wider society was best for its long term growth and survival, not just that of its shareholders? Where did this version of capitalism go? Yes, capitalism has proven itself to be a good system in comparison to other economic systems, but no there isn’t just 1 way to play the capitalism game. Like all games played by humans, it needs moderation and an element of control.

And so the pendulum kept swinging from 1980 to the version of neoliberal capitalism we have today. One where Government is getting smaller and smaller. The role of Government is becoming one in which they are administrators for large corporates and the 0.1% and maybe even worse, they have now become facilitators of the transfer of wealth from us, to the 0.1%, locked in a Faustian pact in which they can line their pocked beyond what they thought would be possible whilst turning a blind eye to what the 0.1% are gaining at our and our grandchildren’s expense.

When this model came to a spectacular crashing end in 2008, there was no alternative set of political ideas lying around for a strong political leader to pick up like there was in the 80’s, so instead it continued and even reinforced its worst points. Our political leaders were watered down even further into the low level administrators we see in Truss and Sunak. People with no vision and no plan. Who throw out fake goodies to try to win votes and will one day wonder why people are so disillusioned with politicians, or bemoan social media abuse towards politicians. Thatcher wouldn’t recognise the capitalism we have today, but that in itself shows that there is an alternative to what we have today. We are at the same turning point as we were in 1980 today, instead of miners holding the country to ransom, its energy companies, but we have no leader ready to face them down.

In 1980, the chances of a move towards Communism were reducing. The socialist version of capitalism we had seemed to show that a further move left towards Communism would not be the right route. Centrally organised and politically led solutions were not working. Whereas today, we have no cold war. Unfortunately, as well as having no good ideas lying around, and no decent strong politicians anymore, we have a vacuum. Anything can fill that vacuum. For Millennials and Gen Z, they also have an alternative version of capitalism that is state organised they see playing out in China, and that version doesn’t look too bad if you’re not a Muslim, aren’t religious and are happy not voting and being a good citizen. Chinese strong leadership, ever increasing wealth generation on generation, exactly what the younger generation are missing. Its not hard to see why younger people are attracted to a Chinese model.

Laissez-faire capitalism, similar to neo-liberal capitalism crashed in the 1930s. Socialist capitalism crashed following 2 decades of decline in the 1960s/70s ending in 1980. Neoliberal capitalism has been in the ascendant ever since, but crashed in 2008 with the Banking Crisis but hobbling along for a few more decades.

And this brings us up to date but leaves one huge question outstanding. If at all these moments of change in history these new versions of capitalism were there waiting to take over, what is the big vision today? Why are we missing that? I think one reason we are missing that is because the current version of capitalism is so beneficial for the wealthy, there is no reason to research and find something different. Unlike the 70's those with power, the workers, were not the wealthiest, but now, wealth and power go together, that is very difficult to change. You don’t look for ways to make it more difficult to get into your own gold mine.

So we have to come up with the new ideas ourselves.

So I am going to propose a new version. I’m going to call it Humanist Capitalism. And that will be explained in a later blog.

End.