Crony Capitalism is Failing; Let's Try the Real Thing
by DANIEL HANNAN
January 6, 2012
'Opinion in good men is but knowledge in the making' stated John Milton (1608 – 1674) in the Areopagitica.
The past four years have seen governments throughout the West turn to a ghoulish corporatism, in which selected private companies are bailed out with public money. Understandably, people from across the political spectrum have reacted angrily. The Tea Partiers and the Occupiers are both protesting against the same thing, viz the rescue of large banks by taxpayers.
But whereas the Occupiers, in a slightly inchoate way, believe they are complaining about capitalism, free marketeers point out that, in a capitalist system, bad banks would have been allowed to collapse, their assets sold to more efficient competitors. Bondholders, shareholders and some depositors would have lost money, but taxpayers wouldn't have contributed a penny.
When we make that argument in full – as I did in a direct exchange with some Occupy LSX types recently (see here) – the typical response is 'Yeah, well that might be your theoretical capitalism, but we're dealing with the one that actually exists'.
This is a reasonable objection. We capitalists mustn't become like those student Trotskyists who were forever insisting that the USSR wasn't really communist, and that proper socialism had never been tried.
What, then, is genuine capitalism? Where can you find it? What changes do we need to make to the present system to get there? I was planning to write a lengthy blog about it, but then I discovered that Jesse Norman, the cerebral MP for Hereford, had got there first. His paper, The Case for Real Capitalism, is worth reading in full. Having worked in the City before becoming a philosophy don, he understands in practice as well as in theory where the system has gone wrong. And he proposes concrete steps to put it right, to make shareholders think of themselves as owners rather than investors, to incentivise saving and boost competition.
FamilySecurityMatters.org Contributor Daniel Hannan is a British writer and journalist. He has been Conservative MEP for South East England since 1999. He speaks French and Spanish and loves Europe, but believes that the EU is making its constituent nations poorer, less democratic and less free. He is the winner of the Bastiat Award for online journalism.
Daniel Hannan is a British writer and journalist, and has been Conservative MEP for South East England since 1999. He speaks French and Spanish and loves Europe, but believes that the EU is making its constituent nations poorer, less democratic and less free. He is the winner of the Bastiat Award for online journalism.