Comment: Cable is right about capitalism
By Ian Dunt
You can learn a great deal about our society by the strength of the reaction to Vince Cable’s speech. Yesterday afternoon, when the embargoed copy came in, it contained one particular sentence which triggered mass hysteria. “Capitalism takes no prisoners and kills competition where it can.” This is not really a complicated or controversial assumption. Capitalism, left alone, kills competition. Once one actor becomes sufficiently large it typically attempts to own its playground. Take Sky’s relationship with the Premier League. Is that really competition, even despite recent efforts to expand the availability of Sky Sports channels? You either pay to watch Sky Sports, or you have to wait for Match of the Day. There is no competition, not for the consumer at least. Take Waterstones or Starbucks, which use the sheer weight of their purchasing power and their ability to air bomb towns with multiple shops to kill off small independent competitors.
The argument made by various sources today, including Digby Jones and the business press, that making this point is Marxist is utterly absurd. Marxism is a political philosophy which, among other things, encourages public ownership of the means of production. That’s arguable. Saying that government interference is required to prevent capitalism from killing competition is just empirical fact. If a business secretary didn’t believe that I’d jump off a roof.
Cable’s argument was made with colour and drama because he needs to settle Lib Dem nerves about the coalition’s economic agenda. They are right to be nervous, and they should not be reassured by what he said today. The coalition will make thousands of public sector workers unemployed and pray the private sector fills the space. Maybe it will, maybe it won’t. I don’t believe it will, as it happens, and certainly not to the extent envisaged in the 2015 timetable. But that is a separate debate, one which is being held endlessly in the media. Another debate – much more worthwhile – asks whether that is the right thing to do. Most reasonable people agree the deficit must be reduced, but current plans go well beyond what was necessary. This is a wholesale reform of the structure of the British economy. It stems from a simple thought: market = good.
When we brand that assumption ideological we do so for entirely accurate reasons. For the vast majority of people, this is a dead debate. Most people believe in a mixed economy. The public loves the NHS and the BBC. It does not believe in a privatised education system. It simply wants good services delivered for free under a system of taxation which is modelled on income. On the other side, it does not want state-provided restaurants or T-shirts.
Whether the private sector provides some public services, as Tony Blair once envisaged, is irrelevant. Most people don’t care. On either side of them there is a tiny section of ideologues: those who refuse private involvement in the provision of services for reason bordering on the religious, and those – much more powerful but equally immune to evidence – who assume the market is always right and public services always inefficient. This view, in the academic sense at least, stems from the role of money, which communicates value (supply and demand) instantly.
This is a valid point. But there are other kinds of efficiency too. Take this fundamental question, which is no less important than the role of money. It is about the role of humans. Why should people need homes and not have them when builders are out of work? The spending review detonates on the British political landscape on October 20th. The effect it will have on inner-city councils will be severe. Housing budgets will be devastated. Ask yourself that question again in a year’s time. Why should anyone be denied a home whren there are builders out of work? it’s a profound question. The market is efficient for capital, not necessarily for human need.
It was not public sector workers who got us into this mess. It was the financial sector, with its pointless games and repackaged debts and macho risk taking, all of which do nothing for our society, Even the most ineffectual quango improves my life more than a banker. The media is engaged in an epic libel against the public sector. It would have us believe that all public sector workers are upper management with an income above £60K. The media won’t be happy until the public sector can offer only poverty wages in a desperate race to the bottom.
As for the bankers, they pretend nothing happened. Barclays’ decision to appoint Bob Diamond as boss tells us everything we need to know. They will never change. They don’t have to. There may be stories about bankers’ bonuses in the wake of the recession, but whenever anyone widens the debate to a critique of the private sector in a manner similar to that deployed against the public sector, the knives come out. Cable’s speech today, which hardly demanded that we man the barricades, already set off a blistering response from the business community and the media.
If you say these things, investment will flee the UK, they say. It is an argument that will get us nowhere. It will leave us in stasis. Economies should be analysed on a case-by-case basis, with human need and the free market coexisting on the basis of a political settlement which has existed, in this country at least, since the Second World War. It’s always the fundamentalist capitalists – like the people hitting the airwaves to attack Cable this morning – who are first to shout ‘Marxist’ at modest criticism of the private sector.
Cable is right about capitalism. If he should be attacked for anything, it is for allowing the deficit reduction plan to further threaten that settlement.
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