It is therefore politically brave of David Cameron to have launched a fully fledged defence of the free-market system. Ed Miliband and Nick Clegg seem intent only on taming and restricting it, of forcing it through intervention to become more socially responsible. In the present environment, this is an altogether easier message. Mr Cameron, by contrast, wants to embrace capitalism. He is right to do so. The solution to our problems does not lie in ever greater regulation and government interference, or indeed in socially levelling forms of taxation, but, as Mr Cameron says, in enterprise, innovation and competition.
To the extent that capitalism has gone wrong, it is because it was allowed to become corrupted and hijacked by vested interests. Capitalism?s tendency towards excess and self-destruction is a matter of well-documented record and repeated regret. As long ago as the 18th century, Adam Smith noted that ?as soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce?.
It?s an observation that could have been written to describe the behaviour of modern finance. But it is the very antithesis of the way capitalism is meant to work in creating growth, employment and income for all.
Mr Cameron instinctively grasps capitalism?s awesome powers of wealth creation, as well as its flaws. The problem is that he is failing to match rhetoric with policy. His speech was eloquent, but where?s the beef?
It is no accident that America is emerging, reinvigorated, from this crisis far earlier than are the UK and Europe. This is because the US remains far more openly capitalist, and has allowed the process of Darwinian renewal to kick in. In Europe, problems such as under-capitalised banks and protected industries have been allowed to fester.
With the British economy flatlining, there is lamentably little sign of the sort of supply-side, free-market reforms necessary to restore growth and jobs. This newspaper has long advocated such measures ? in particular, the removal of the 50 per cent tax band, which is acting as a strong disincentive to work and wealth creation, and the tax-neutral initiative of National Insurance holidays for new employees.
Warts and all, capitalism works. But it will not function properly if it is gummed up by a mix of well-meaning but counter-productive social goals and a failure of political ambition.
key news best news economic news finance news economic news world us news about us business business news news
No comments:
Post a Comment