It’s time for civic capitalism

We need a new model of capitalism, one that is based on civic values, argue Colin Hay and Anthony Payne 

We’ve thought for a while that it’s time to move on from the mawkish (if necessary) analysis of the failings of the now infamous Anglo-liberal model of capitalism and from lamenting the absence of new thinking about what might replace it. The moment has arrived when we need to pin some colours to the mast of a new model that will work better in advanced capitalist countries.

This is a bold endeavour, fraught with difficulties, both intellectual and political. But we took the view that, if somebody didn’t try to tackle this question, then we would have no excuse if we looked back in a few years and found that a bastard version of the old model still rules. Our new, and very short, book published by Polity Press in March is the outcome of our efforts.

What do we mean in this context by a model of capitalism? Nothing more, but also nothing less, than a coherent framework of distinguishing features that combine to suggest a particular way of conducting the daily business of capitalist economies. It should possess a clear sense of the particular vision of the good society to which it aspires and in that sense will be a model of development as much as a model of growth.

Capitalism needs to be seen to have a

moral purpose; otherwise, it’s just a rat race.

It’s important also to emphasise what a model of capitalism is not – what it does not and cannot do. Specifically, it won’t tell us exactly what policies to follow in detail in every situation. For example, it might well insist on the need to embrace macroeconomic policy more fully, but it won’t reveal exactly when to raise interest rates or at what level to set taxes. Similarly, it might suggest that we need a workable industrial policy, but it won’t tell us which winners to back or even if backing winners is the best approach.

In other words, the task of setting out a new model of capitalism is more like designing a new car than offering advice to the driver from the passenger seat! It’s also, critically, about offering a plausible narrative that explains to the people living and working within it what they are part of, how they might fit in, what gives their productive lives some meaning. Capitalism needs to be seen to have a moral purpose; otherwise, it’s just a rat race.

In our present circumstances the obvious and best starting-point seemed to be the nature of the old model that so extensively failed us. We identify the following as its key features:

• The hegemony of an assertive neoliberal ideology;
• An elite policy community trapped in its thinking within this narrow ideological framework;
• Substantial deregulation of markets and privatisation of financial management;
• Huge dependence on the supply of cheap hydrocarbons, with seriously damaging environmental consequences;
• The systemic accumulation of debt and the increasingly pathological dependence of consumption (and, in turn, growth) on such debt;
• An accumulation of risk within the economic system;
• The absence of a coherent theory of society, or social wellbeing, beyond the sum of individual, supposedly rational goal-seeking;
• The consequent embedding of inequalities between and within countries; and
• A limited view of global governance as little more than rules to manage competition between national economies.

A sensible, and realistic, next step in working away from this model might therefore begin by simply adjusting, and of course in some cases redressing completely, each of these nine features. What sort of a model might then emerge? If we follow through the logic of this simple but important thought experiment, we proceed quickly to the broad outline of a new model of capitalism characterised by rather different distinguishing features:

• The re-emergence of a broader dominant ideology grounded in social democratic, ‘welfarist’ and social market thinking;
• A policy community open to different, more interventionist, more fluid approaches to economic and social challenges;
• Coordinated re-regulation of markets and risk management in the collective public interest;
• Serious engagement with sustainable models of energy use and resource conservation;
• Economic stimulation built on investment rather than debt-fuelled consumption;
• The development of alternative standardised measures of national economic performance beyond GDP;
• The integration into this growth model of the concept of ‘social quality’;
• A shared commitment to reducing prevailing levels of inequality between countries and peoples; and
• The creation of more intensive and sophisticated, flexible and deliberative, mechanisms of global governance.

A final question pressed on us as we thought and wrote: namely, what to call this new model? After all, labels matter. We think it is best described as a model of ‘civic capitalism’. We need in effect to remind ourselves that capitalism can and must be made to work for us as citizens of a democratic polity. It’s time, surely, to ask what capitalism can do for us and not what we can do for capitalism. Don’t you agree?

• Colin Hay and Anthony Payne, authors of Civic Capitalism and the directors of the Sheffield Political Economy Research Institute (SPERI).