the free market in danger

Capitalism is running into a fundamental problem: for various reasons a declining proportion of the population feels able to gain any meaningful stake in it. And if you cannot see how you can gain a stake in capitalism, why should you support it? There is a growing constituency of people who, if the economy progresses in the same direction as it is doing now, will inevitably come round to wondering whether they would not be better off under a more centrally planned, more redistributive system of government in which housing, in particular, is a resource provided by the state. For those of us who lived through the Cold War and the stagnation of British nationalised industries during the 1970s, socialism may seem an unappealing relic of history. But I am not sure that I would feel that way if I were 25 and felt frozen out of the market economy.
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You don’t have to be a closet socialist to feel the anger; on the contrary, the bailout was proof that our free market system tends to become rather less free when powerful people are in danger of losing money. Our economic system would be better described as fairweather laissez-faireism which turns highly interventionist for the wealthy and powerful when the weather turns bad.
If we are going to have intervention and state-ownership in the bad times it becomes difficult not to ask why we should not also have them during the good times. It isn’t going to come from the encampment outside St Paul’s, but conditions may soon be right so as to enable a coherent voice on the left to sell the British public at least as collectivist a programme as the one they voted for in 1945.

There is an alternative: to tweak the rules openly and deliberately so as to promote wealth-accumulation among the masses. How about a law demanding that all salaries above £100,000 in public companies must be payable in company stock which cannot be sold for at least five years after an individual’s involvement with the company has ended? Then, the interests of the directors would be aligned with that of small shareholders: the former would have to build long-term value in their companies. In the short term they would have to earn cash through paying dividends to everyone, not just bonuses to themselves.

Ross Clark, no Spectator desta semana.