On the 26th June just past, the second international conference on Inclusive Capitalism was held at the Mansion House in London. Did you see it on the TV news? Me neither.
Surprising really, as the A-list speakers have included Prince Charles, Christine Lagarde chief of the International Monetary Fund, Mark Carney head of the Bank of England, Justin Welby the Archbishop of Canterbury and Bill Clinton former President of the United States not to mention the biggest chiefs of some of the biggest business corporations in the world.
What is Inclusive Capitalism?
To quote from their website http://www.inc-cap.com/
‘Inclusive Capitalism is a global effort to restore capitalism as an engine of broadly shared prosperity. Together we can achieve this through business and investment practices that extend the opportunities and benefits of our economic system to everyone.’
This year’s speeches can be seen on line if you missed them. The views may surprise you, they promote an inclusive ‘stakeholder’ philosophy to business as opposed to purely a shareholder one. They favour long term inclusive business plans rather than short term quarterly profits and deal making – that’s the capitalism that makes money out of money - the type of capitalism that led to the world financial crash in 2008.
The concentration of wealth at the top is not a new capitalist phenomena. Before WW1 inequality was far greater in Britain than today. The un-dramatized world of Downton Abbey. The two world wars destroyed enormous amounts of capital, reducing inequality and creating a more equal society especially post 1945. As Britain rebuilt and the economy grew in the decades after WW2, inequality was suppressed. The senior generation today are some of the economic beneficiaries of that rebuilding process. However in more recent decades wealth has started to concentrate at the top again, as financial markets were deregulated in the digital age. The younger generations are trying to make their way in a quite different world from their parents and grandparents. Without reform it’s a recipe for ‘clogs to clogs’ in three generations.
Inequality increases in recessions as capital grows faster than wages. Anybody who owns a house knows this. The average house value increased by over £14k in 2014 yet wages hardly grew. When the economy grows, inequality reduces in theory, as wage increases have some hope of keeping up with capital. Yet in the 21st century figures show that even with a growing economy and improving productivity this is not entirely the case. The wages share of the GDP cake has declined and the capital share has increased. It is these trends that Inclusive Capitalism are trying to reform.
But why would business want to make these reforms you may well ask?
It would be nice to think their aims were purely altruistic, and no doubt some are, but there is a hard headed business reason behind them as well. The hard fact is - if wages are suppressed there are less people able to buy products and services. Secondly, a business with a well-paid workforce that lives in harmony with its local community and society is far more profitable.
At a time when the ONS reports that the top 1 % of the UK’s population owns as much as the bottom 55%, the Labour Party has a modern strategy of supporting the organisations aims through Inclusive Politics. We are historically the peoples reforming Party, we can be in the future.