Alistair Thompson is a councillor in Portsmouth and part of the City Seats Initiative in West Bromwich. He also runs Media Intelligence Partners with business partner Nick Wood, the former press secretary to Conservative leaders William Hague and Iain Duncan Smith.
There has of late been near universal condemnation of ‘capitalism’ and the so-called capitalist system we operate in our country.
It has been blamed for the collapse of the banking system, a rise in crime, recession and now the morally repugnant spectacle of the banking chiefs – including those in charge of the fully and part-nationalised banks – benefiting from the sort of huge bonuses they received in the good years; the years when they, encouraged by this thoroughly bankrupt Government, encouraged you and I to engage in an orgy of spending fuelled by a growth in personal debt.
Now before you think that I am some sort of bearded, sandal wearing leftie, I am not and I agree with the myriad comments about why those bonuses are utterly tasteless and reprehensible.
No one, certainly not the bankers, has made the argument why they should receive even a brass farthing in bonuses, as my father would say (apparently it has something to do with pre-decimalisation), but many of us, commentators, journalists and politicians just seem to have bought into the idea that this is the fault of the economic system we operate. It is not, nor should it been seen as the fault of a capitalist system.
Nowhere in The Wealth of Nations or any other book I have read about
‘capitalism’ do they advocate the reward of failure: that in my mind
has been and always will be a trait of socialism and I would argue that
the obscene rewards currently being announced to these bankers is as
far removed from a truly capitalist system as you can get.
A truly capitalist system, like Darwin’s theory of evolution, is
about survival of the fittest. Capitalism does not say reward failure,
it says penalise it. What should happen in a capitalist system is
that these guys – and they are predominantly men – should get the boot, be
fired, find a P45 in the wage packet, use whatever euphemism you want,
but the end result should be the same: their failure should not be rewarded and especially not at the expense of the hard-pressed taxpayer – yet
this is exactly what is happening.
So how are these bankers getting away with this?
Simple, the Government is petrified to let any bank go under. Brown
is scared to admit that the golden legacy handed to him by Ken Clarke
has turned to dust, Government coffers are empty and the nation’s
credit card maxed out. Some say that he is haunted by the damage that
the collapse of Barings Bank in 1994 did to the Major Government and he
does not want a repeat of this on his own.
The second reason is just as important: on Brown’s watch, something
like a million jobs have been lost in manufacturing. Our dependency on
the financial sector in London is complete. If I am wrong, then why do
many other parts of the UK rely so heavily on the Government for jobs with nearly 80% of their economy depending on public spending, as in
Northern Ireland, and parts of the north being nearly as bad.
The inconvenient truth, to coin a phrase, is that Brown has wrecked
the economy and if he does not throw vast sums of our cash at these
failed businesses in an attempt to keep them propped up, the cash cow
that has allowed the development of Brown’s client state will come
If anyone doubts this, think about the number of quangos and people
employed under this form of Government patronage – 700,000 people
employed by groups like the National Potato Council or Teachers TV and
the cost to every household is a staggering £2,500.
Contrast this to a truly capitalist response to the recession which
would be to cut taxes on business and individuals. Allow people to make
their own decision about how to spend their money once more and the savings to British business would be significant For
example, according to the TaxPayers’ Alliance, by abolishing Regional
Development Agencies, the small business rates could be cut to 18 pence
in the pound.
Of course, the Conservative response should not stop at cutting
taxes, but must include slashing regulation in an attempt to promote a
new entrepreneurial spirit – but I digress.
The fact is that our current economic system, the colossal amounts
of state regulation, intervention and rewarding of failure should not
be seen as capitalism. If we fall into this trap then I fear that we
will move even closer to a planned economy, where Brown and his cronies
will have even more say on how we live our lives, what we spend our
money on and what we produce and that scares me more than I care to
say: doesn’t it scare you too?