You can take large sections of the Bank of England Governor’s speech on Inclusive Capitalism, delivered yesterday, and easily see them transposed into Ed’s introduction on page 1 of our manifesto.
Indeed, while the Governor was developing his argument for banking to become responsible and reconnected to its community and social obligations, Ed was making the same point, more generally, while speaking about the nature of work and the vital importance of secure employment as a foundation of community.
Read the Governor’s speech alongside that of the Leader of the Labour Party and ask whether there would have been any difficulty at all in either of them giving the other speech.
Only when Ed says it, he is greeted by accusations of being anti-business.
But it wasn’t Ed who said the problem is that ‘fundamentalist capitalism’ makes the present over-valued and leaves the future discounted. It was the Governor.
‘Fundamentalist capitalism’ is precisely the formulation that embraces the policy solutions Ed has been promoting, for example in relation to insufficiently competitive sectors, such as energy and banking. A capitalism that has placed stratospheric compensation far above valuing and serving the customer.
‘Over-valuing the present’ is precisely what we mean when we argue that there is too much short-termism, geared around the rapid extraction of the maximum available return, often to the detriment of the economy’s long term interests.
‘The future discounted’ is exactly what we mean when we point to the growth of devalued work, as a result of low pay, insecurity of employment, at the long term cost to society as a result of an uneven distribution of skills and opportunity.
We should certainly not hesitate to take Mr Carney’s invitation in respect of banking reform. Can Labour really stand accused of being anti-business if we propose to turn the Governor’s call for fair markets, trusted finance and responsible firms into practical realities?
Can we really be anti-business if we embrace his concept of market fundamentalism, and say that the toxic mixture of light touch regulation, unburstable bubbles, and stymied market disciplines cannot and must not be allowed to continue?
We can surely now embark on the second banking rescue – that of its reputation and its ethics – safe in the knowledge that the Governor has spoken, and set down the challenge of establishing inclusive capitalism.
But his analysis and his proposed remedies apply more generally. He poses a simple and powerful question – ‘to whom is the financier responsible?’ We should ask the same question across the board. Let’s ask it of all those operating in systemically important positions, right throughout the private sector, and through the public sector too. It seems to be a perfectly fair starting point when considering how to make our education system or our health system function in a way that sets priorities around the ultimate outcomes for young people or patients.
Or as the Governor put it, employees need strong connections to their clients.
In the end fundamentalist capitalism leaves too many people behind. As the Governor said, like a revolution consuming its own children. Once it begins to reach that point, the consensus on which it ultimately rests begins to break. The more exclusive the capitalism, the greater the loss of trust.
If the political system is seen as incapable of either challenging the exclusivity or rebuilding the trust, it too begins to lose consent.
And how is that manifest? Declining participation and increasing support for parties that substitute sound policies with simplistic, crude populist rhetoric.
The Governor set out some strikingly bold analysis of what went wrong in banking and some tough prescriptions for how it should be fixed.
Labour’s challenge is the same, only far broader in its application.
Ed should frame it in the 2015 manifesto with a boldness that the times and the circumstances demand.