A new British Academy report argues that the UK has a ‘particularly extreme form of capitalism’ — is that something we need to address?
Professor Christopher McKenna, co-director of the Global History of Capitalism Project at Oxford University, says YES.
The proliferation of environmentally damaging industrial practices, the social divisions arising from monopoly power, and the inadequate response to the 2008 crisis have all eroded public trust in capitalism and contributed to the widespread view that the UK’s capitalist system is no longer working.
When companies post strong financial results but fail to deliver adequate social and environmental standards, they are effectively claiming “fake profits” rather than “fair profits”. The true cost of their activities has not been fully counted. If it is to work, capitalism depends upon balancing those two goals.
As the new British Academy report outlines, we need to rethink the basic principles of capitalism to better reflect the inequities in the system and help corporations fulfil their social purpose.
Capitalism is not an end in itself but a means to achieve economic progress in an equitable way. It is ours to create and also ours to reform. And systematic reform is always a better solution than settling for extremism.
Dr Eamonn Butler, director of the Adam Smith Institute, says NO.
This country is capitalist only in name. Business is already forced into the state’s purposes — its push for social responsibility, its equality agenda, its “green” ambitions. Most regulation is counterproductive, cost-raising, and competition-killing. And don’t complain about institutional investors when company law has stripped small shareholders of power. Fix the law.
Academics have no idea what capitalism is. They just want to spend investors’ cash on their middle-class problems. But who should decide a company’s “purpose” — the investors who put their money at risk, or academics and ideologues like the shadow chancellor?
The purpose of business is to make profits. In open markets, you can only make profits by creating more value for people than you use up. That’s what has pulled a billion people out of abject poverty in just 30 years, not the previous 70 years of state direction.
Rising wealth is what empowers us to solve problems — and for that we need more and purer capitalism, not less.
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