Martin Sandbu argued in the FT yesterday that:
Liberal democratic capitalism is on the defensive against illiberal nationalism because of three combined economic failures.
One in the past: its neglect of those left behind and at the sharp end of inequality by four decades of structural economic change — in particular de-industrialisation and the native, male working class whose traditional jobs it ended.
A second is still playing itself out in the present: the global financial crisis and its aftermath, which has seen the young particularly afflicted with increased economic insecurity from a combination (depending on the country) of high unemployment, poor wage growth, precarious work conditions and lack of access to housing.
The third is, for now, a prospective failure but one causing real dread: the threat of further structural economic change in which technology will displace masses of jobs.
Or to put it another way, the pursuit of profit maximisation, come what may, kills the host economy that permits that goal.
Sandbu makes a fundamental error. He thinks liberal, democratic capitalism is what we have had for forty years. It isn’t. We have had anti-democratic financial capitalism that does not seek to make profit from meeting need but does instead seek to do so by exploiting weakness and arbitraging rules to extract rents where none are due. It is this that is rightly under threat, albeit the source of the threat is to be deeply regretted.
Neither democracy or the capitalism of the mixed economy that might serve us well can survive unless the cancer of market abuse is eliminated. That elimination is the required solution. Tax justice is part of that, of course.
Right now, however, Brexit is driving us in the wrong direction.
Whilst Labour’s plan to return natural monopolies to state control where they belong is being resisted mightily.
The saving democratic capitalism project is not going well as a result.