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The C-word: politicians and capitalism | Editorial

Unease and more with capitalism is widespread, evident from the steps of St Paul’s to the headlines about banker payouts

“Today many people are questioning … the whole way our economy works,” said David Cameron. Unease – and more – with capitalism is widespread, evident from the steps of St Paul’s to the headlines about banker payouts: in that sense, politicians are merely catching up with the public. Nevertheless, it is still astonishing to hear a Conservative prime minister attack the City, commend co-operatives and talk about the crisis of capitalism. Talk may be cheap, but words retain value: Mr Cameron has just moved bonuses, corporate governance and inequality to the top of the government’s agenda. He may have been forced into it, but this remains an opportunity that should not be squandered.

For all his fine words about more moral markets Mr Cameron had little yet to offer by way of detail. Ditto Nick Clegg in this week’s paean to John Lewis. Nevertheless, it’s clear the three main parties bring different approaches to the question of how to reform markets. The fashionable argument that Dave copies Ed who fundamentally agrees with Nick is lazy: on pay, there are real divides. Mr Cameron has the narrowest angle: his speech dwelled on the most egregious aspects of contemporary capitalism, like the massive rewards for failure in the banking sector. And yet his proposals and his record are lame. Conservative pot shots at overpaid leaders of state-run banks are fun, but it was George Osborne who in 2010 signed off a £4.6m golden hello for incoming Lloyd’s boss Antonio Horta-Osorio. Not much sticking up for the 99% there.

On Tuesday, when Vince Cable publishes his proposals on bosses’ pay, the Liberal Democrats will probably show they have a broader target: the old boys’ club that dominates so many boardrooms and for whom every year merits a double-digit pay rise. Good, but not good enough. Ed Miliband’s argument is broader: he rightly treats fat-cattery as both an example and an amplifier of wider inequality. He also has the most far-ranging policies, including putting workers on the company remuneration committees that set executive pay and forcing bosses to publish pay ratios. It would be even better if he insisted that remuneration committees discuss rank-and-file wages or if Labour and the Lib Dems got seriously interested in Germany’s co-determination model of business management.

Let’s also be clear: inequality has taken off as an issue because workers have seen their pay effectively cut and their jobs threatened, thanks to a wrong-headed austerity programme. One big way to make people better off would be to concentrate on stimulating the economy. Politicians might think talking about corporate governance and greedy bosses lets them off the hook, when it comes to their part in driving the economy south. It doesn’t. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds