Time away permits a little reflection, and whether capitalism can survive is a question I did muse upon. It seems timely to ask for two reasons. The first is because of climate change, where everything must adapt or fall by the wayside in the interests of survival of humanity on earth. The second is because capitalism seems so politically out of favour.
Let me deal with the second issue first, because it sets the scene. For generations now we have been used, at least in Europe and most especially the UK, to political debate taking place primarily between the advocates of the interests of capital and labour. In this context, capital meant the interests of business. That, however, seems to no longer be true, with the proponents of business being those to have most definitely departed the scene.
The political right-wing is no longer driven by the interests of business. Brexit is something business interests clearly oppose. Immigration is something most business interests are clearly in favour of. And populism appears to have little appeal to many business interests, who seek as broad a customer base as possible and so embrace issues that populism rejects.
Don't get me wrong. I am not saying business is suddenly all about enlightened self-interest. What I am saying is that both the Tories and the Brexit Party have ignored the interests of business in pursuit of their dogmatic goals. Those ‘captains of industry' who would once have presumed that their warnings would be heard by any Tory administration must by now be getting the feeling that they are deeply unloved by any likely right-wing occupant of Downing Street, and most especially the current one. Their interests are decidedly low on his agenda.
The consequence is real. As a matter of fact I think Brexit will lay waste to large numbers of British businesses. Most are marginally capitalised at best, meaning that they have access to relatively limited resources to deal with a period of significant disruption on their supply chains. And what we know is that we face a period of substantial disruption in supply chains now. And with much of British business built on the basis of outsourcing, where supply chains are dependent upon a whole series of contractors being able to work together to achieve a high degree of efficiency, I think that the risk of domino effects is very high indeed.
To take one example: for the government to pretend that hard Brexit would not result in both long border delays and serious disruption to the right of British hauliers to work in Europe would be absurd. Both are inevitable and entirely foreseeable. And haulage is a sector that works on very tight margins indeed, usually because the contractor is guaranteed a cash flow by being integrated into their customer's business with a guarantee of work as a result. That then lets them lease vehicles knowing they will have high usage rates even if margins are tight. And now the question is who pays for the delays at ports and the inability to take trucks abroad, both of which will result in big losses being incurred by hauliers?
The customer will already be suffering disruption to their supply chain and heavy cost as a result. They won't want to pay the haulier more. But if the haulier suffers this for long their cash flow - and their capital - will rapidly vanish, and bankruptcy will follow. And replacing haulage companies takes time, I would suggest. But it would seem that the government has no clue about this.
There are two reasons for that. One is that they do not care. That is because they are really dogmatic enough to be indifferent to the risk.
The second is that they do not know. Jeremy Hunt made much of his supposed entrepreneurial qualities in the Tory leadership election. I would doubt them, but he was right to stress how unusual he is: the Tories and real business are Venn diagrams that hardly overlap any more. The Tories and finance overlap, of course. As do the Tories and rentiers. As do the Tories and tax haven interests overlap. But these are not real business activities, whatever the Tories now think. They are the parasitic, rent-seeking activities that are almost as loathed by many in real business as they are by Labour. The Tories just don't understand business anymore.
And so the paradox is that it may be that it is the Tories that will create the biggest modern crisis for capitalism.
And that leaves a real issue. First that's because no one has really moved to fill the void the Tories' absence creates. And second it's because Labour has not apparently realised it has to divide and rule, with the aim of bringing business but not finance into its orbit. It could do that, and benefit those in whose interests it acts. After all, when business is being ignored by the Tories it will want someone to talk to. And it will need all the help it can get, even if big conditions are attached, as Labour would require.
And that brings me to climate change. Business has to adapt radically as a result of global heating. I do not think it has any clue by how much as yet. The suggestion I have put forward for sustainable cost accounting appears radical, but in the context of what is required is a modest proposal for reform. Transformation has to be on the political agenda. The old agenda of being opposed to capital per se now makes no sense if it can be changed, and climate change creates that opportunity.
Capital is unloved right now, even by its supposed friends. That makes it open to change. My belief is that the left has to encourage that change. It can be radical. That will, anyway, be necessary. But business will be a necessary part of our future, and private ownership will survive. What is necessary then is a willingness to reimagine how it might do that in the collective interest. And given the hostility of the right to business at present there has never been a better moment for the left to reach out to try to effect that change that is necessary to create a better form of capitalism. I think it could work. And that it is the only way for capitalism to survive.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
From today, the planet is surviving on credit, according to a climate emergency theory.
Whether you believe this arbitrary date is correct or not, alarmist or not, creating the conditions to start repaying this credit, or even to eliminate it, will take a lot of capital.
Business could and should lead the way, together with research, government backing and incentives.
But I fear the majority of political forces in all economic blocks are completely uninterested in the long-term future.
Politics is becoming more dogmatic (including the dogma that progress is based on old-style production and consumerism of goods) and less pragmatic, which means the planet will continue to be abused, while humans will continue to struggle to survive. And many won’t. Many will fall victims to this mad race for more power and material wealth. Many will flee from disaster zones, trying to survive, crossing seas and borders, no matter the risks.
While those rich countries continue to protect the richest, the most damaging elements of their financial elites.
There needs to be an awakening. It’s simmering, here and there, but is it enough.
Good to hear you’ve had an opportunity to recharge the batteries.
I agree wholeheartedly with the points your are making. But the problem is that there is no evidence that the current Labour high command has any interest in facililiating the survival and transformation of capitalism so that it can generate socially and economically beneficial outcomes in the collective interest.
So a no deal BREXIT is likely to lead to a drop in domestic consumer consumption ?
Unless I’ve misunderstood a number of your previous posts, I thought that was one of your required conditions for our survival of the climate emergency we are facing ?
We do need to drop consumption
But in a planned and not a chaotic way that harms the vulnerable most
You are just trying to score cheap points very badly
To some extent we could regard Capitalism as having died a death already having been overtaken by financialisation as being the only game in town.
Capitalism traditionally was seen as a means of accessing the money to create productive enterprises which supplied society’s needs (with the incentive of profit). All we seem to be interested in now is the accumulation of nominal piles of wealth.
It’s the Midas myth with the substitution of money for gold. Practical capitalism seems dead already except in small scale ventures.
Although…. JCB and or its directors remain a quality and successful manufacturer and an enormous contributor to the Conservatives – and in favour of Brexit.
Perhaps they are just the exception that proves the rule.
Haulage is going to be key in any Brexit scenario – not only do they have tiny margins but if if they do get paid (and that will mean higher prices at home) for extended journey times then if a journey that used to take a day now takes a day and a half then that means that for the same work you need 50% more vehicles. Where are they coming from? The spot hire fleet is tiny – particularly for refigerated (ie food) vehicles. They do not exist. Like almost everything else transport is based on efficiency not resilience. Crashing out without a deal will lead to food shortages, until more trucks can be found.
Labour should be as business friendly as possible – and they should start by being small business champions, which we know employ more people than anyone else. Here the hollowing out of the state has meant that whereas there used to be local offices, though true that they were really about enforcement, they had a beneficial subsidiary role of offering advice, which is particularly useful for people whose primary skill is their business but who have also to be, for example, their very own personnel department. There is now nobody to offer any friendly advice unless you hang on a phone for hours – if you can even find the right department.
Peter May says:
“Labour should be as business friendly as possible — and they should start by being small business champions,…..”
….and the way they can do this is somewhere they won’t likely go; viz they need to tackle the problem that the principle beneficiaries of most smaller businesses are the money lenders renting cash for operating capital.
Government schemes for business investment funding on smaller scale are (as far as I can gather from my forays into the realm) entirely sub-let to the private sector and at variously fanciful interest rates.
Corbyn and McDonnell are going to take-on the finance sector ? In our dreams. But the streams of government handouts for large corporate enterprises is not likely to dry-up under a Labour government than under a Tory one; not on the evidence of recent history at any rate. Government long since gave up any responsibility for hands-on management or direct control of any productive industry even those essential to national infrastructure security. Outsourcing companies perform only for money and have all the best contract lawyers it seems.
How do you (or probably anyone else on this thread) what capitalism really looks like when you haven’t done a days work in industry?..you pontificate like you are a captain of industry and i repeat, you haven’t done a days work in an industrial setting in your life. What credibility therefore do you to discuss the needs of industry and business Brexit related or not?
How many factories have you set up?
Or directed?
How many firms of accountants have you been senior partner of?
How many companies do you direct now?
You clearly have not done your research about me
Now stop wasting our time
Well I haven’t worked as an accountant but I did work for 15yrs in mechanical engineering so have worked in many plants, factories and oil rigs before moving in venture capital where I have financed and worked on the board of many companies typically manufacturing., so as it happens I am well placed to pass comment..and I stand by what I said that you haven’t worked on a shop floor and have no insight as to business or industry other than audit or raising finance.. that really doesn’t prize qualified comment.
And as I pointed out – that’s completely wrong….
Bit candidly, you’re here to troll bigotry and I really have no truck for that
In response to Mr Dowson: I used to work as the factory services engineer for the sony factory in Bridgend that produced televisions. I supervised factory extensions and modifications, had my own budget, ran my own show with two main aims: get costs for services down, on no account should factory services fail. Sony set up in South Wales mainly due to Uk government bribes – oops subsidies – never paid taxes (e.g. 1989 – £400m turnover – zero tax) & engaged in transfer pricing – through the simple expedient of charging consultancy rates for ex-pat Japanese engineers. In the late 1990s the decision was made to build flat panel tvs in the Czech republic (lower cost labour & one supposes a good deal).
The needs of industry – hmm would that be British industry? or non Uk industry? Would that be non-UK industry serving European markets? – that particular bird is taking off – never to return. Unlike you, Mr Dowson, I have contact with several of the director generals in METI – trust me on this: the advice japanese companies now (and in 2016 post the vote) was – don’t touch the UK with a bargepole. Or let’s try this: my meetings with the Dutch enconomics ministry (I had a Japanese delegation discussing a project) – during a break the lead guy talked about Brexit and the numbers of japanese & korean companies discussing relocating from the Uk to the Netherlands.
The “needs of UK companies”. Would be nice if banks were focused on industry and not funding real-estate speculation. Would be nice if there was long term support…. it would be nice if Uk companies were seen as national assets rather than something to support the £ exchange rate – the sale of ARM – (£16bn?) was useful for that. The Uk has hollowed out its industrial base & on current form it will hollow out even more – because the Uk does not have industrialists or even capitalists – it has financialists.
🙂
Mike what you say us fair enough and you clearly have the experience which warrants fair comment. My post was directed at Richard Murphy.. setting up a distribution outlet for a game, working in audit, running a blogging entity, Fair tax mark and doing some teacher is not working in industry as I see it. Maybe i have missed something
You have
You think that only your experience matters
And that only your experience permits comment
And what you miss is the profound arrogance of that
Well said.
Alan
I bet Richard has looked at a lot of accounts belonging to businesses over the year’s as an accountant and the accounts can tell you a lot about how well a business is ran. I’m sure can tell bad from good.
But the real point is Alan that it is not Richard and us of ‘pontificators’ running the country – it’s people like Boris Johnson who got paid a lot of money for writing a few no doubt pontifying pieces here and there and was also sacked for making things up!!! And that was his job!!
Read some of Richard’s books – he knows how to make the UK a great place to live again believe you me and I bet he doesn’t earn as much as Boris did when he was writing up his slap-dash efforts for the ‘Torygraph’ – £275,000 a year last time I looked. Money for old rope says I.
Yes – I agree with your post about Tory dogma.
It was Neo-lib dogma that led to Thatcher using interest rates to control the economy in the early 1980’s – interest rates went up when British manufacturing needed low interest rates for bridging loans in their production cycles and this put many a firm out of business. I remember that the CBI then had nothing but scorn for Thatcher.
All the Tories could say at the time was that British business was week and badly ran – but then they would because most of the Tory cabinet were from the City.
The Thatcherite Tories are truly a destructive force in British politics who have over stayed their welcome.
[…] noted yesterday the questions that might appropriately be asked about the future of capitalism. I suggested it is […]
[…] noted yesterday the questions that might appropriately be asked about the future of capitalism. I suggested it is […]
Dismantling capitalism, dismantling Democracy, dismantling the climate – all together. Interesting times………..All interrelated ? Chickens and eggs ? Its going to take some miraculous management, what with Disaster Capitalism and / or Disaster Socialism lining up for slices of the fallout………
economist Marianna Mazzucato has made a similar observation in her book The Value of Everything , and in her recent presentations – “​we don’t have business itself arguing for a more productive form of capitalism”
https://www.youtube.com/watch?v=bsh-SYKUuwg&feature=youtu.be
Transcript: from – https://aspen-ideas-festival-production.s3.us-east-2.amazonaws.com/nulla236674b-c80f-4823-88ef-830f0caa176c/AIF-062419-119-Value-Everything.pdf