At the beginning of 2009, I set myself the task of writing a column about the future of capitalism. As the financial crisis unfolded and its future impact on society and the global economy began to emerge, it became a more daunting task by the day.
The more I thought about the future of capitalism, the more scrambled my brain became. In a previous job as editor of a European business magazine, I had examined the alternatives to globalisation, but that was 2004 and the world has changed beyond recognition since then.
For a start, it was difficult to understand what exactly had gone wrong – and was still going wrong – with the capitalist systems that had emerged during the last 30 years. And as the financial crisis exploded, ever more sensational twists in the story emerged: from the banking meltdown to stories of greed, lax regulation and fraudulent borrowing, from gross failures of leadership and the limits of globalisation, this was a complex and multi-dimensional story. Like 9/11, the other cataclysmic event of the decade, the financial crisis and its aftermath defies easy explanation and will no doubt have scholars and historians writing about it for years to come.
Which is why I am delighted to discover that my former colleagues at the Financial Times have launched a new series on the Future of Capitalism. As well as a comprehensive view of what has happened and a suggested survival plan for global capitalism, it is full of in-depth articles on the future of capitalism, two of which really stood out because they look ahead to a brighter future.
First, Richard Layard, author of Happiness and a prominent economist, calls for an end to ‘selfish capitalism’, urging us to create society where we stop worshiping wealth and start appreciating people. Second, Luiz Inacio Lula da Silva, the President of Brazil, says that while nobody dares to predict today what will be the future of capitalism, he is more interested in the sort of society that will emerge from the crisis. His vision? A system that will reward production, not speculation, a controlled financial sector, no protectionism…. a new and dynamic system of global governance, new energy policies, reform of systems of production and consumption, a world free of dogmas presented as absolute truths, a more just and democratic society. ‘Lula’s’ account of his own journey from an impoverished childhood to political and social reformer is inspirational in itself.
Both authors call for a more humane society, based on collective rather than individualistic values. Far from being idealistic views, they are being echoed widely among business and political leaders, economists and academics. In the gathering of world leaders at Davos in January, Bill Gates called for a more ‘creative capitalism’ while Britain’s opposition leader, David Cameron, set out the case for ‘capitalism with a conscience.’
Earlier this year, one of the UK’s most lauded guides to the crisis, BBC business editor Robert Peston, suggested that the New Capitalism might be a fairer, less alienating model than its predecessor, a “kinder, gentler, less divisive [model], less of a casino in which the winner takes all”
In truth, there have long been voices rumbling warnings about how laissez-faire was spinning out of control and the threats it posed to democratic society. As far back as 1997, uber-capitalist investor George Soros warned of its dangers and he now believes that the financial crisis marks the end of free market capitalism, an event as significant as fall of the Soviet Union in 1991.
More recently, in 2006, Nouriel ” Dr Doom” Roubini, professor of economics at New York University, was dismissed as a ‘permabear’ for warning that the US was heading towards a deep recession. Now he believes that the Anglo-Saxon model of capitalism has failed completely.
Another prescient thinker was John Kay, who analysed and debunked what he called the “American Business Model” (ABM) in his 2003 book, The Truth About Markets. In his book, Mr Kay cites a question posed by economists Ken Arrow and Frank Hahn in 1971: “What will an economy motivated by greed and controlled by a very large number of different agents look like?” The economists answered their own question, he writes: “There will be chaos.”
What do you think of the current chaos? What are your thoughts about capitalism – its failures and its future? What are the alternatives to capitalism? Do you have a vision for a different kind of capitalism? Or do we need a completely new system for the 21st century?
