OH dear. Can I ask Michael Fry one question? How many times does capitalism have to fail to live up to its billing before he sees it is not the only option?
Capitalism is good in theory, the provision of goods and services matching up what people want with what they are prepared to pay, but today it is unfettered, deregulated and dangerous. I found myself agreeing entirely with Ian Johnstone’s assessment of the IMF’s effect on small nations – definitely not benign. And the Scandinavian commitment to welfare arises from valuing people over profit, unlike the UK.
Michael Fry sees capitalism as unfailingly standing on its own two feet, without state intervention. He also appears to equate happiness with ever more material goods. Lower wages, annihilation of workers’ rights, and degradation of the environment are all for the goal of ever more productivity to increase the “standard of living” materially – how new our car is, how big our house, how far we upstaged our neighbours in the holidays we could buy. But this does not measure people’s real contentment.
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He sees the public sector as irredeemably inefficient. We can’t subsidise the sloppy or the bankrupt, but he fails to recognise how much the state subsidises private enterprise. Business start-ups and established firms may get incentives like tax or rent breaks, just to set up or move into an area. Big businesses often pay their staff so little that their staff qualify for tax credits or Universal Credit, another subsidy from the public purse. The Covid Corporate Finance Facility (CCFF) gave a big helping hand to very large firms recently, when SMEs and many self-employed failed to qualify for help. Recently the Scottish Government gave £900,000 to the NHS to buy Home Farm from the private sector, which sees our older citizens as a cash opportunity to be exploited at maximum profit on minimum investment. Quite a subsidy, not to mention the Scottish Government’s Communities Fund subsidising rich landowners via community buyouts.
Has Fry forgotten the possibly £1 trillion pound subsidy to the banks since 2008, a reward for gambling on getting ever more profit and losing? None of this appears to be the benign capitalism he preaches. And when he criticises socialism, I would argue that the Soviet Union was not truly communist, but in essence a state-capitalist society.
Margaret Thatcher did not privatise steel, coal, energy, transport to make them more efficient or because we were subsidising parts of the economy we no longer needed. She just handed them cheap to people who got a few shares. Then we wonder why we have a rail system which is highly inefficient and costs consumers the Earth. Ditto energy, not the invisible hand at work, but a manmade cartel of suppliers keeping prices artificially high at the consumer’s expense. Firms handed to investors in this way failed to reinvest their profits, preferring to pay more to shareholders. And now we import coal and steel, and mining communities are only to be found in heritage centres.
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Conversely the public sector was systematically starved of cash by UK governments for decades, resulting in outsourcing of core services. But even for them the greed for more profit led them to overextend themselves only to crash and burn. We now have to pick up the pieces. The Private Finance Initiative/Public Private Finance is another example of councils, health trusts and others being forced into deals to build shoddy infrastructure costing many times what it should have, another subsidy from the public. And what of the failings of corporate law overseeing capitalism which saw Robert Maxwell and Philip Green accused of asset-stripping and stealing pension funds? Does Michael Fry not see any of these examples of unbridled capitalism? They are not the exception, they are the norm.
Scotland may be best suited to the middle way of a truly mixed economy, curbing capitalist excesses like Airbnb decimating city centres, Amazon and others paying what seem very low taxes, and enforcing mandatory worker participation on boards, while properly valuing and funding the public sector. On the evidence of late, however, that all seems a forlorn hope.
Julia Pannell
Friockheim, Tayside
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