We must start thinking about how to construct something better out of the widely analysed failings of Anglo-liberal capitalism
It is time to move on from the mawkish (if necessary) analysis of the failings of the now infamous Anglo-liberal model of capitalism and from lamenting the absence of new thinking about what might replace it. The moment has arrived when we need to pin some colours to the mast of a new model that will work better in advanced capitalist countries.
This is a bold endeavour, fraught with difficulties, both intellectual and political. But if we don’t try to tackle it we shall have no excuse if we look back in a few years and find that a bastard version of the old model still rules – and that the systemic weaknesses which the crisis exposed remain unresolved and threaten us still.
What do we mean in this context by a model of capitalism? Nothing more, but also nothing less, than a coherent framework of distinguishing features that combine to suggest a particular way of conducting the daily business of capitalist economies. It should possess a clear sense of the particular vision of the good society to which it aspires. In that sense it will be a model of development as much as a model of growth and it needs to reveal a consistent and defensible conception of social justice. Lastly, such a model should be applicable to a range of advanced post-industrial economies, not just to Britain alone – as well as offering insight into the many problems which capitalist economies face together and for which coordinated collective action is required.
It’s important also to emphasise what a model of capitalism is not – what it does not and cannot do. Specifically, it will not tell you exactly what policies to follow in detail in every situation. For example, it might well insist on the need to embrace the full range of macroeconomic considerations (supply and demand), but it won’t tell you exactly when to raise interest rates or at what level to set taxes. Similarly, it might suggest that you need a workable industrial policy, but it won’t tell you which winners to back or even if backing winners is the best approach.
In other words, the task of setting out a new model of capitalism is more like designing a new car than offering advice to the driver from the passenger seat – and arguably there has been rather a lot of that already. It’s also, critically, about offering a plausible narrative that explains to the people living and working within it what they are part of, how they might fit in, what gives their productive lives some meaning. Capitalism needs to be seen to have a moral purpose, because otherwise it just becomes a rat race.
Where, then, to begin? Political economy as a field has previously engaged extensively in discussion of ‘models of capitalism’ and ‘models of development’. There is a big literature out there. But the truth is that it has rather run out of steam in the last few years and remains limited to the exposition of a small number of quite crude ‘ideal types’ (some of whose exemplars have revealed themselves far from ‘ideal’ when seen in the context of the crisis). The analysis has also tended to be static and hasn’t coped well with the new realities of regional and global economic interdependence.
In our present circumstances the obvious and best starting-point is surely the nature of the old model. It has unquestionably failed us, but there within its modern history lies the wreckage from which we have to re-build. In a previous SPERI publication one of us (Hay) identified the following as the key features of this Anglo-liberal model:
- the hegemony of an assertive neoliberal ideology;
- an elite policy community increasingly trapped in its thinking within this narrow ideological framework;
- substantial deregulation of markets and privatisation of financial management;
- huge dependence on the supply of cheap hydrocarbons, with seriously damaging environmental consequences;
- the systemic accumulation of debt and the increasingly pathological dependence of consumption (and, in turn, growth) on such debt;
- an accumulation of risk within the economic system, with growth over time increasingly associated with accelerating exposure to that risk;
- the absence of a coherent theory of society, or social well-being, beyond the sum of individual, supposedly rational goal-seeking;
- the consequent embedding of inequalities between and within countries; and
- a limited view of global governance as requiring little more than rules to manage competition between national economies.
A sensible, and realistic, next step in working away from this model might therefore begin by simply adjusting, and of course in some cases redressing completely, each of these nine features. What sort of a model might then emerge? If we follow through the logic of the thought experiment we have just proposed, we proceed quickly to the broad outline of a new model of capitalism characterised now by these rather different distinguishing features:
- the re-emergence of a broader dominant ideology grounded in social democratic, ‘welfarist’ and social market thinking;
- a policy community open to different, more interventionist, more fluid approaches to economic and social challenges;
- coordinated re-regulation of markets and risk management in the collective public interest;
- serious engagement with sustainable models of energy use and resource conservation;
- economic stimulation built upon investment rather than debt-fuelled consumption;
- the development of alternative standardised measures of national economic performance beyond GDP (and hence economic output);
- the integration into this growth model of the concept of ‘social quality’;
- a shared commitment to reducing prevailing levels of inequality between countries and peoples; and
- the creation of more intensive and sophisticated, flexible and deliberative, mechanisms of global governance capable of serving as (or at least reflecting) the guiding intelligence of the global economy.
In a series of blog posts over the next 3-4 months we shall explore further each of these potential characteristics of a new model of capitalism appropriate to Britain and other advanced post-industrial economies. We shall seek in effect to build this new model piece by piece at approximately fortnightly intervals.
A final question beckons, however, even at this early stage: namely, what to call this new model? After all, labels do matter. A new model has to be popular, broad-based, and work for the vast majority of the people. But it needs to be more than just ‘populist’ in orientation, given that more is at stake here than the provision, merely, of more ‘bread’ and better ‘circuses’. In short, the new model of capitalism we need has to be productive and sustainable, as well as popular.
We think it is best described as a model of ‘Civic Capitalism’, deploying the word civic in its simplest and most straightforward usage – ‘pertaining to’ and ‘working for’ all of us in society, not just as consumers, or rational egotists, or even voters, but rather as citizens of a democratic polity. In the process of calling for and articulating such an alternative we need to remind ourselves that capitalism can and must be made to work for us. We can no longer be driven by its perceived imperatives and by those who have claimed for far too long – and, as it turns out, falsely – to be able to discern for us what capitalism needs. It is time to ask what capitalism can do for us and not what we can do for capitalism.