I was one of those who thought that Capitalism would collapse with the failure of Northern Rock and Leeman Brothers. The financial sector would realise the error of its ways, society would begin to look at the value of our quality of life and the mutuals and co-operatives would flourish. This didn't happen. What did occur was the shift in power to the private sector. They now hold all the cards, government is powerless as we need profitable companies to survive.
If we don't stimulate corporate profit we do not receive the volume of tax we receive from corporation tax (9% in 2008). If business doesn't grow we don't get employment, public sector cuts mean that the reliance on the public sector has gone. Low employment levels means a burden two fold on tax. An increase in unemployment payments, and a decrease in spending, income tax and NI. All in all tax paid by employers and employee's directly through corporation tax, income tax and NI equates to 57% of the taxable income. Add VAT into that and you have nearly 75% of the tax revenue of UK Plc linked directly to corporate. The burden taken on by the government during our boom years (that really resemble the emperors new clothes) leaves the UK and much of the developed world at the mercy of global corporates.
If the public purse is slimming and the corporate world still driving down wages and pushing up
profit then is it right to suggest that the key to our sustainable future is capitalism.
Mike Chitty recently told me of Danone and their attitude to producing bottled water in Cambodia. Rather than dealing through governments, they chose to look at the challenge in a different way. Produce clean bottled water at a price affordable to the general populous and still return a profit. This business model, I would guess, is unique, however, I feel this holds the key to a sustainable future.
During the 1800's the industrial revolution saw the urbanisation of the British population which caused untold policy headaches in terms of working conditions, sanitary conditions, housing, crime, food supply etc... The pioneers to changing our society were not politicians but business owners. Joseph Rowntree, The Cadbury Family and Titus Salt (A Leeds Lad!) all led the way in changing our lives. The politicians didn't have the budget or know where to begin and the UK is dotted with parks, museums, libraries and churches built by these ground breaking philanthropists.
If we are going to see a sustainable economy, we need radical changes. We will no doubt need some finance, we will need to solve social problems, educational headaches and the every present threat of globalisation. The capitalist need to engage with this in a new way. If we build new train lines, new renewable energy plants, develop new farming and business models, we need to think as Danone do. What do we need, what can the people afford and how do we make revenue. This may lead you all to think that we will get cheaper poorer quality goods and services, but why drive a Rolls Royce when a Ford will do the same job at a fraction of the cost.
Sustainability is not a pipe dream or something we cannot achieve, it is simply something we are trying to over complicate. Capitalism is not pure evil either and profits are invaluable. The question we need to ask when thinking of anything we want to be sustainable is not how but why. Why are we doing this, who will benefit, why do they need it, who benefits?
People are key to any economics and to make anything sustainable it needs to add some value.
The next stage from here is what is value and why is it valuable.
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