On Newsnight last night there was a long feature by Paul Mason with comment by Phillip Blond about so-called new forms of capitalism. The piece consisted of Paul Mason going round various businesses in St. Davids in Wales and putting words into the mouths of the business owners about his perception of capitalism. Mason was then heartened by the responses of the business owners who seemed to be promoting a new softer brand of capitalism. Straw man after straw man was put up and knocked down again and again.
The basic idea Mason was trying to get across was that capitalism to date has been about maximising growth and profit and that this new breed of business people had a more balanced outlook on life which was socially more acceptable.
Mason would not recognise a free economy if it stood up and slapped him in the face. From a social perspective, a business is quite simply a community of persons that exists to meet its own ends by serving the ends of others. That fact alone deserves some contemplation and it is a wonderful thing. A free economy naturally leads to variety because seven billion people in the world have different aims and objectives both as consumers and producers. Most businesses are small and the ends of the business owners are naturally diverse. Most people who work for businesses also have quite diverse aims in life. There are relatively few people in society who get up every morning and try to maximise their material output for the day and most businesses best achieve their objectives (even if the main objective is return on capital) by remaining small. One of the people made an apparently profound statement that they “optimise not maximise”. Don’t we all? Haven’t we always?
Different types of business organisations come and go but the cooperative, fair trade, charities, universities (often set up as non-profit-making corporate entities), mutuals, building societies, friendly societies have, at different times, been part and parcel of the rich tapestry of a market economy. Football and cricket is very important to many people but who has ever come across of football club or county cricket club that maximises profit? No, they act purposefully to achieve whatever their objectives are.
Then, along comes Phillip Blond arguing that the re-localisation of finance was necessary to reinvigorate the economy, praising the organisations in Mason’s piece and criticising other forms of business as having created a thirty-year bust (on which we are about to embark). Two things can be said in response. Firstly, we should be careful when criticising those businesses that choose to grow big and produce more “things” more cheaply. It is precisely because of such businesses (for example, Easyjet) that the less well off enjoy the foreign holidays and so on that Paul Mason probably takes for granted. Much lower mortgage margins than my parents enjoyed exist today because of competition in the banking sector. Secondly, Blond wants to design the economy so it takes the shape he would like. He consistently ignores the evidence that the demise of many of the community-based institutions that he admires (especially in finance) was caused by state intervention – especially the welfare state (which to be fair Blond criticises) but also state intervention in the form of financial regulation.
In summary, if we want to have a more diverse free economy then we need to extend the domain of freedom and not constrict it.