Duncan Hamilton: David Cameron and Co missing the bigger picture on capitalism

THERE is something inevitably unconvincing about watching three middle-aged men in dark suits making speeches at three different London venues, each attempting to convince us they are prepared to turn capitalism upside down.

Where Swampy (where is he now?) failed, apparently David Cameron, Ed Miliband and Nick Clegg will succeed.

It’s all Ed Miliband’s fault, really. He started this with a swipe at “predatory capitalism” and demanding “responsible capitalism”. Now they are all at it – Cameron calling for “moral capitalism”, and Nick Clegg attacking “crony capitalism”. All rightly sense public disquiet and now follow the trawler of opinion like seagulls.

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But for me, this debate is bogus. Read the speeches from last week – none of the participants know what it is they want to change, beyond a general sense that income inequality and executive pay have reached unsustainable levels.

None wants an end to capitalism, and none wants to intrude into areas which will inhibit growth.

All respect the roles of companies and shareholders and implicitly accept that despite lambasting “the market”, our only way out of this mess depends on competing and succeeding in that same market. None mentions the impact of the global economy and the risk of capital flight. All pretend that the range of worthy domestic initiatives mentioned, from urging companies to show “social responsibility” to hopeful pronouncements that average pay will increase, are somehow part of “redefining capitalism”. They aren’t. Capitalism is simply a neutral means of delivering an economically efficient result. It is a rational economic system. It is neither good nor bad. Yes, it comes in different shapes and sizes – just think of China and the US – but that is because of the differences in each political context.

The role of government and the degree to which intervention, control and freedom hold sway will dictate the degree to which capitalism is allowed to function.

Those are entirely human choices and political priorities which distort the market, very often for good. Therefore, rather than pretend rather grandly that a new economic orthodoxy is born or seek to define “moral capitalism”, “responsible capitalism” or any other meaningless phrase tossed into this discussion, what we need to understand is that there is really just capitalism. The question is not whether capitalism is moral or responsible, but whether we are. We are in charge of this machine. If it isn’t working, it is because we aren’t using it in a way designed to deliver the result we want. The attempt to have this as some sort of distant, academic debate about the nature of capitalism is misleading, this is an argument about the nature of government, of democracy and of political priorities. It is about politicians taking responsibility, not being scared of intervening where appropriate or trusting the market where that seems wise.

That begs the question – what is in the national interest? Redistribution of wealth and power or efficient allocation of resources at the continuing expense of social equity? Where on that spectrum each party sits and what interventions they propose – that’s what we need to be hearing from our politicians. After that, it’s up to us to decide what kind of country we want to live in. Ultimately, we call the shots.

In fairness to Cameron, Miliband and Clegg, at least they have attempted to tackle one of the big issues of the moment in an intellectually considered way. By contrast, the clamour for Sir Fred Goodwin to be stripped of his knighthood smacks of playing to the worst instincts of the mob.

Let’s be clear – I’m guessing no-one needs to tell Fred Goodwin that his celebrated and stellar expansion at RBS ended in devastating failure, both for the bank and for the country. I shared, and share, the anger. But if we are seriously trying to engage in changing our attitudes to capitalism in a mature and reflective way, that does not sit easily with this rush to vilify still further a fallen man.

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Perhaps some perspective is required. No crime has been committed, unlike, for example, Lord Watson of Invergowrie (he of the burning curtains) or Lord Archer (perjury) or any of the peers convicted in the expenses scandal. Yet those people can apparently keep their titles. Goodwin, by contrast, made a series of dreadful decisions and the financial world came tumbling down. All reasons to fire him. All reasons to revisit the nature of the banking industry and regulation. Goodwin’s reputation as a businessman will never recover, but stripping him of a knighthood (recommended by the government which failed to regulate his bank) is spiteful and small.

RBS took a wrong turn with catastrophic consequences. But when Goodwin was knighted in 2004, there wasn’t a single murmur of discontent. The argument for stripping him now assumes the benefit of hindsight, ignores the role of the FSA, turns a blind eye to the collective failure of the RBS board and plays to a vengeful tabloid mentality which demands we see life with cartoon-like simplicity.

I appreciate this isn’t a popular view, but for me, vilification just starts to demean us all. There are big questions of capitalism to answer, the personal status of Goodwin in a discredited honours system just isn’t one of them.