Henry McLeish: capitalism isn't working for the many

Written by Henry McLeish on 26 November 2015 in Comment

Labour has to expose the weaknesses, excesses and failures of capitalism and the myth of the ‘free market’

The continuing debate on tax credits and the shameless Tory assault on the working poor are serious issues in their own right.

Reflecting their anti-austerity obsession and their callous indifference to the plight of those on the social and economic margins of British society, this government is struggling to hide the weaknesses and excesses of the so-called ‘free market’.

Capitalism isn’t working for the many. This is now the issue which threatens to turn Britain into an economic and social shadow of what was once a compassionate, considerate and coherent country. Labour has to debunk all the myths and put capitalism to work for the many not the few.


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Labour believes it lost the last election because of its failure to persuade electors that it had a credible economic policy.

Their narrative was weak. Storylines were unconvincing. Little thought was given to the notion that ideas matter because they underpin the material on which a political strategy and progressive consensus can be shaped and they explain how Britain is and might be changed. Labour needs to win that battle of ideas. 

The Tories have developed some poisonous ideas around welfare and work, worth and wealth. With no alternative narrative, the electorate faces a highly regressive tax and spend agenda and a socially divisive set of welfare policies.

At the core of this strategy is the selling of capitalism and the free market. The Tories want a society where greed is good, wealth is worth and people serve money, not the other way around.

However, “the ‘free market’ is a myth that prevents us from examining the rule changes and asking whom they serve,” argues Robert Reich in his new and inspiring book, Saving Capitalism: For the Many. Not the Few.

“Few ideas have more profoundly poisoned the minds of more people than the notion of a ‘free market’ existing somewhere in the universe, into which government intrudes,” he adds. “In this view whatever inequality or insecurity the market generates is assumed to be a natural and inevitable consequence of impersonal market forces.”

Reich predicts that “the coming challenge is not to technology or to economics. It is a challenge to democracy. The critical debate for the future is not about the size of government; it is about whom government is for. The central choice is between a market organised for broadly based prosperity and one designed to deliver all the gains to a few at the top.” 

Reich reminds us we need not be victims of market forces because “the market is a human creation. It is based on rules that human beings devise. The central question is who shapes those rules and for what purpose.”

Labour must address this very challenge. The myth of the free market is backed up by simplistic, faux arguments such as ‘government is too big’, ‘the state crowds out private investment’, ‘don’t interfere with or unfairly regulate the market’, and ‘for the market to thrive, we need to cut public expenditure’.

This Conservative government, so influenced by ultras, provides cheerleaders for these crude ideas with a powerful ideological commitment to the ‘free market’. In tandem, there is a conspiracy against the many but especially, in Tory rhetoric, ‘hard-working people’.

Labour must confront and eventually replace the Tories’ policies. When you have a political party openly embracing the market then the interests of the many are unlikely to be heard.

Today’s hallmarks of this man-made creation are conspicuous:  growing inequality; more children living in poverty; diminishing social mobility; the relentless rise in the numbers of working poor; increasing social tensions and bitter divisions in society; the rise of the non-working rich; the Americanisation or pauperisation of our welfare system; increasing fear, uncertainty and insecurity; massive cuts to our public services; and threats to the constitutional future of the Union.

This is a powerful rap sheet. Labour’s task, then, is to develop a new economic narrative.

The Tories’ mantra seeks to convince people that there is no alternative to the ‘free market’. The weaknesses and excesses they seek to cover up are unavoidable and impossible to mitigate. The basic rules of capitalism are not written in stone. They are written and implemented by human beings.

The near idolatry they heap upon it is, in Tory eyes, a natural wonder of creation that we should not meddle with other than to make it work better. But the real question is, in whose interests, the many or the few?

Labour has to expose the weaknesses, excesses and failures of capitalism and the total myth of the so-called ‘free market’, for there is no such thing.

It is a human construct, created by politicians, law makers and courts, who, in turn, are lobbied by powerful interest groups.

Paying homage is not needed. It doesn’t have to be worshipped. The prevailing view has become so dominant that it is almost taken for granted.

This is about money and economics but in reality, it is about power, priorities, politics and democracy. This is the battleground on which Labour has to reshape Britain. We need to regain influence over how the market is organised.

 

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