Responsible Capitalism: A Liberal Tradition

By Laurence Makins

The old adage has been proved true once again: Liberals are the nose of British politics – in the middle and out in front. Liberal Democrats can feel pleased that there is growing cross party consensus on the need to recalibrate capitalism. Lib Dem policy that was ignored at a time when Labour was “intensely relaxed about people getting filthy rich” and the Conservatives still supported Section 28 has now become part of mainstream political discourse.

Yet there is still cause for wariness. There is scant historical or philosophical evidence that Labour or the Conservatives can deliver free enterprise that serves the needs of the many. The Liberal Democrats are the only party with a history of standing up to the vested interests, keeping enterprise free and putting social responsibility at the heart of business.

For a start, Labour has a record of cowardice and opportunism when it comes to tackling cronyism. Ed Miliband would have you believe that he has defined the debate on responsible capitalism. Like the claims about his ‘brave’ stance against the Murdoch press – we know it to be a lie. The duplicitous opportunism of Ed Miliband is a blog topic for another day, but Labour’s utter ineptitude when it comes to creating responsible capitalism cannot be ignored.

Take for example Labour’s Regional Development Agencies. They were wasteful, poorly targeted public sector fiefdoms that did nothing to help the regions most in need of investment and nothing to build competition or entrepreneurialism. 62% of all RDA funding went straight to the public sector and Unions rather than SMEs. When public cash did go to businesses it found its way into the pockets of striving firms such as JP Morgan, EON, BAE Systems and AMEC.

This is the true face of Labour’s fight against cronyism. In power Labour poured vast sums of public money straight into the pockets of their bully-boy Union backers, arms manufacturers, FTSE 100 companies, energy crooks and multinational banking corporations. It’s nothing short of criminal.

The Labour party has too much baggage and too little credibility on this issue. Their rhetoric is a welcome change from their largesse in government, but it remains to be seen if they have the stomach to take on the vested interests and back up their words with deeds.

The Conservative party has a similar story.

Conservatives like to think of their party as the home of free market innovation, however the truth is very different. The Tory party was founded on the ideals of Protectionism and the preservation of the interests of a rich, landed class of robber barons. In contrast to their free trade Liberal opponents of the time, the purpose of the Tory party was to stifle free enterprise and entrench the interests of the few. With privatisation and the free market approach Margaret Thatcher exorcised many of these demons. However the enterprise she unleashed was rigged in favour of the few, which in turn created a form of cronyism still deified by the bulk of the Tory party today. Can we truly believe that the Damascene conversion taken by a party that receives the lion’s share of its funding from the City is genuine?

In contrast, Liberals have a proud tradition of producing philanthropic, responsible capitalists. Take for example Liberal MP and Radical William Rathbone who was an immensely wealthy merchant trader and capitalist innovator. He was also a renowned philanthropist and financed Florence Nightingale’s Liverpool Training School and Home for Nurses.

Another Liberal MP Samuel Morley was a hugely successful manufacturer and philanthropic capitalist. He turned his company from a small family business to the largest of its kind in the world and used the profits to fund radical social projects. Both Rathbone and Morley are great Liberals who saw capitalism not as a means to unlimited profits, but as the driver of radical social improvement.

This is the Liberal tradition that the party must aspire to today, and it is a tradition that we can never forget. In government Liberal Democrats have a historic opportunity to put truly Liberal values and responsible capitalism at the heart of British politics. Reforming capitalism, ending rewards for failure and taking on the vested interests of big business have long been Liberal goals. Let’s make them a reality now that we have the chance.


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