When 'Inclusive' Capitalism Becomes Socialism

Capitalism is not the answer to human suffering. At the same time, it is the only economic system which allows individual freedom to flourish; it produces unrivalled prosperity; and, as Michael Novak perceptively says in the 1991 edition of The Spirit of Democratic Capitalism, “it is the most practical hope of the world’s poor: no magic wand, but the best hope.”

Not content, some very rich people, the Archbishop of Canterbury and the Pope, among others, want capitalism to do more. Enter “inclusive capitalism” and its more recent stablemate “stakeholder capitalism.”

It was May 2014. A conference called “Making Capitalism More Inclusive” was held in London. Inclusive capitalism is a concept developed in 2012 by the Henry Jackson Society - a British think tank of classical-liberal persuasion. It started well enough with the principal objective being to engender more ethical behaviour in business practices. The excesses surrounding the recession of 2009/10 were fresh in mind. Unfortunately, it has gone rapidly downhill since.

The aforementioned conference was opened by Prince Charles and featured Bill Clinton, Christine Lagarde, Mark Carney and Lawrence Summers. Hardly a conservative or classical liberal in sight. Three conferences have followed: in London in June 2015, in New York in October 2016 and back in London in March 2018. Presumably, Covid has prevented holding a more recent conference. No matter. Those behind inclusive capitalism co-opted the Pope to keep the pot simmering.

Money makes the world go 'round.

As the Union of Catholic Asian News (UCA News) puts it, Pope Francis has become the “moral guide to inclusive capitalism.” ‘The Council for Inclusive Capitalism (the Council), with the Vatican onboard, was launched on December 8 last year. Earlier in the year, in May, The Great Reset was unveiled at Davos. “Stakeholder capitalism” became the watchword; encompassing the same grand idea as inclusive capitalism.

So, to my theme: What’s it all about or, in other words, what do ‘they’ want; and why is the whole thing a crock or, more politely, misconceived?

This is Mark Carney, the then Governor of the Bank of England, at the 2014 conference to which I referred: “Inclusive capitalism is fundamentally about delivering a basic social contract comprised of relative equality of outcomes, equality of opportunity, and fairness across generations.” Hard to believe coming from a central banker? He’s Canadian.

This is easier to believe. Justin Welby, participating in the 2015 conference, outlining his aspirations for capitalism: “A generosity of spirit that doesn’t always seek the greatest return…that meets the needs of the poor and the excluded and the suffering.”

To add waffle to waffle, the Council’s mission is to “harness the private sector to create a more inclusive, sustainable and trusted economic system.” Understandably, sustainability is featured. After all, the Pope urges us to listen to “the cry of the earth.” Hmm? Smacking too much of paganism? Perish the thought.

Klaus Schwab, Executive Chairman of the World Economic Forum, expanded on the term stakeholder capitalism in February this year. He identified two primary stakeholders. One is the planet (no, not kidding); the other is everyone, wherever they live. The respective wellbeing of both stakeholders is the objective. Though, Schwab notes, “people are social animals and their absolute well-being is less important than their relative well-being.” Got that. You and your neighbour each having ten dollars is better than him having fifteen and you only twelve.

How the idea of levelling down translates to those participating at Davos and at inclusive capitalism forums is beyond me. Note this description in UCA News of those calling the shots at inclusive capitalism: “a group of individuals and institutions with more than $10.5 trillion in assets and companies with a combined market capitalization of more than $2 trillion.” They are the woke big end of town. A race apart from the small and medium-sized businesses which make up the bulk of market economies. Their self-appointed mission: to rescue the world by reimagining capitalism.

They are discomforted by the prevailing state of affairs. They want a world within which all existing species survive and thrive, the oceans cease rising, the earth cools and each and every person everywhere enjoys a liveable income and state of the art medical attention.

Leaving aside a slight qualm I have about the earth cooling; the aims are fine. I sometimes daydream about winning a lottery. That fantasy is fine too. To take saving the poor and saving planet earth in turn.

Capitalism makes much of the world prosperous. Part of that is entrepreneurs and businesses striving to earn profits by vigorously competing with each other. Part is prices guiding resources into their best commercial use while informing and rationing demand. Part is not ensuring fair outcomes. Capitalism cannot be moulded into a generous outreach to the poor and disadvantaged. It simply won’t work. It is an idea contradictory at its core.

It's easy if you try. Scary, too.

As for lifting those in poor countries out of poverty, how about advising them to adopt Judeo-Christian institutions and values; the institutions and values that have underpinned economic progress in western countries and in other countries which have tried them. Call them what you like, of course, to make them universally palatable.

I will guess. That advice will never come out of Davos or the Council. Yet, when all is said and done, parliamentary democracy, the rule of law, property rights, free speech and freedom from fear, the absence of systematic nepotism, cronyism and corruption and, vitally, mutual trust, tell the tale of progress; not pie-in-the-sky reimagining of capitalism.

From the unattainable to the unachievable describes the segue from saving the poor to saving the planet. Here’s a thought. What is the ideal state of the planet? Roaming ruminants, sans people, perhaps. Short of that green-dream nirvana wouldn’t it be nice, for example, to get CO2 down to pre-industrial levels? Or would it?

A friend of mine, Ivan Kennedy, emeritus professor of agriculture at Sydney University, tells me that we are now effectively addicted to higher levels of CO2. He estimates that if CO2 were to return to pre-industrial levels it would reduce the photosynthesis of cereal crops by more than 20 percent. This would likely cause famine, malnutrition and death, particularly among the world’s poorest. Something on which the Pope and Archbishop might cogitate.

Delusions More Toxic than Covid

It's now just a few days before Joe Biden, the aged, doddering former U.S. Senator and two term vice president, is inaugurated as the 46th President of the United States. Donald J. Trump was impeached Tuesday, if that is the word for the truncated, evidence-free series of rants by Democratic congressmen on the floor of the House. No facts in were evidence. But a fountain of emotion far more toxic than Covid-19, spewed forth.

Rule of law has disintegrated into some mockery of group therapy in the American capital. One knows better than to ask if this is a function of female leadership. Perhaps it is. But many male Democrats appear to suffer from the uncontrollable rage common to PMS sufferers.  And Trump Derangement Syndrome has gripped them all. 

There's a silver lining to this appalling political theater.  Now, two months after our Third World style election marked by serious claims of massive ballot fraud, including voting by the ineligible and the dead, the inescapable reality has finally arrived. The millions of Trump voter who have entertained the charming but childish notion that an election victory stolen in broad daylight will be restored by some process, before the inauguration -- finally see that it is not going to happen.

Millions of Trump voters have been living with a mental process something like this: ‘You did this horrible thing to us. Everyone saw. The neighbors! The whole world. Surely you are going to admit it and give me back what is rightly mine?’

What -- no Krakens?

But when the entire establishment colludes to remove a president who threatens the profitable operations of the American political and corporate classes, the possibility of a fix in real time is a fantasy.  For most of us, as with any deception and loss, the longer one maintains a dream of justice and happily ever after, the greater the pain and suffering. 

Of course it is very hard to walk away from what we all grew up believing about "the will of the people," and the virtues of democratic representation itself, on which we base our understanding the social compact.  A "Great Reset" to Biden and socialism is bleak, so fantasies persist.

A stolen election leading to the destruction of half the country’s faith in our entire system of governance remains hard to process and accept.  For many it leads to talk of secession, and civil war -- which are not unreasonable if you believe you and your communities have been permanently disenfranchised, and the Constitution shredded.

Consider, however, the possibility that we have already lost that war.  That every institution with power or influence in our nation, is in the hands of the left.  That is the case, even apart from the question of ballot fraud, committed by software or local party hacks. 

Nor is it easier when our tech overlords decree that anyone who dares discuss the deliberately unresolved, barely investigated mounds of evidence that suggest a fraudulent election, is, per the Great (Social) Reset, going to have his social media accounts stripped, insurance policies cancelled, job offers nullified, academic posts and legal partnerships taken away, and a host of other acts of corporate and government destruction of life, liberty, and property.

The ‘social credit’ system, newly imported from Communist China, is coming down hard on anyone who questions the actions of our political overseers -- as has been amply demonstrated, to their shame, by the tech industry's "cancel culture," which has now spread to much of corporate America. Indeed, this has been the case for years for thought crimes in social matters, such as using pronouns associated with biological sex, not chosen "identity," or insufficient enthusiasm for the expansion of "marriage" to any two, or three, or more people. 

O Brave New World!

It sure was neat how last week’s conveniently timed violence at the Capitol, the origins and perpetrators of which are only now being investigated, and perhaps arrested, after a rush to pin it on the President's followers, pushed remaining serious questions about the election's integrity off the table? How the well-timed violence caused Republican senators and congressmen to decide on the spot not to question clearly illegitimate votes in their own states?  Another small reality reset: planned violence helped the narrative crowd out of having to explain away any contradictory facts.

This owes much to our nation’s current lack of a free and honest media, without which a free society can not trust information.  Instead, we are stuffed to the gills with propaganda factories working with partisan politicians. Which is why narratives – big lies -- of the sort that undergird totalitarian societies, have crowded out reality. Especially in a year when everyone was forced to stay at home, watching screens.

For conservatives, the worst narrative of all was Q-Anon, that great psyops that sucked the fight out of millions of patriots, who came to believe that Trump was playing and winning "three dimensional chess" against a gang  of pedophiles, and deep state holders of power. It will take a serious investigative reporter to unearth where the Q cult came from. Considering how the Q fantasy lulls patriots into complacence about "winning," I presume it was perpetrated by Trump's enemies.

So patriotic Americans can be forgiven for believing in the triumph of honesty and justice; that Trump would seize upon a weapon like the Insurrection Act, or martial law; that he would finally get an honest hearing for the suspicious vote tallies, and would serve the second term that he may well have earned -- as Rudy Giuliani, Sydney Powell, and other spokesmen encouraged supporters to believe.  (A question remains as to whether use of the Insurrection Act, to smash  BLM/Antifa during their looting and rioting last summer, would have led to a different outcome now.)

The beast that never came.

But the magic fix fantasy went on way too long. Late last week I watched a rational Trump supporter explain what actions need to happen to preclude the worst of coming Biden Administration policies. An ardent Trumper accused him of weakness for not believing that Trump would pull it all out and take a second oath of office. Just last weekend, I got an email from a Nevada GOP club insisting that Trump would triumph.

In life you should always fight to preclude a bad outcome. Hire lawyers. Spend what it takes. Preach. Trump did some of that. Not enough. Arguably he was blocked. You saw what happened to first-rate lawyers who worked with the Trump campaign. Some careers ended, others were merely threatened.

But when all avenues of victory are closed – accept reality. Retreat. Devise a new strategy. Change plans, tactics, strategy. (Not principles!) Be flexible. But always acknowledge reality. Being an adult means knowing when to fold ‘em, and find a different path.

Actually, it is a relief to dump the dual track planning, and the "hope against hope" that we will not be forced to again tolerate the odious, racialist, radical identity-driven politics of the Obama era. Get rid of the stupid foreign policy of losing purposeless wars of choice, genuflecting to Islamist dictators of impoverished nations, and kowtowing to the Chinese, who are our economic and political enemies. The Green New Deal, tool of economic control, hovers. The Biden/Harris/Obamaites are ready to bring it all back, this time full strength. They are radicals who aspire to soft totalitarianism, with no regard for liberty or the rule of law. Their “Great Reset” will make you poorer, colder and less able to support your family.

The virtue of accepting reality – even a bad reality in which illegal aliens flood our borders and get stimulus checks, and teachers unions destroy school choice, while social credit schemes limit individual liberty --- is that you can mobilize to fight it only when you acknowledge what is really happening. Blinders off, comrades. Clarity or death.

Asking an Over-Burdened Capitalism to Save the World

My boss in my first job in journalism on the Daily Telegraph in London was a genius—a forgotten genius now, alas, because he was known in the trade as “the best editor the Daily Telegraph never had” and those kind of titles don’t pass down the generations. Colin Welch was both a clear-sighted anti-socialist with a sound grasp of economic theory and a wit perpetually fizzing with epigrams and ideas. In a debate in the magazine Encounter with Anthony Crosland, later Foreign Secretary but then Britain’s leading social democratic theoretician, Colin pointed out that the main intellectual flaw in moderate socialism was that it had far too much faith—indeed, unbounded faith—in capitalism.  

Whereas more orthodox leftists wanted to nationalize companies and plan their operations to make them more efficient and profitable, modern-minded social democrats like Crosland accepted that free market disciplines were simply better than state ownership at making companies efficient, profitable, and thus taxable.  

State-owned companies in Britain in the 1960s and 1970s had a distressing tendency to absorb more money in subsidies than they generated in profits and tax revenue. At one point it was estimated that the costs of subsidizing the UK’s coal, steel, and auto industries were equal to the total annual tax revenue from North Sea oil. That kind of thing discredited orthodox socialism and led to Margaret Thatcher’s program of mass privatization in the 1980s that was exported through the world. 

With the collapse of the Soviet Union in late 1991, socialists of all kind had to invent a new definition of socialism, and they came up with one like Crosland's that amounted in theory as well as practice to regulated capitalism.  

Nothing very dramatic there, you may think; capitalism has been regulated since the Victorians. But this kind of regulation went far beyond forbidding the emission of poisonous gases or punishing the man who watered the workers’ beer. Social democrats continued those regulations, of course; indeed, they generally made them heavier. But they also imposed novel regulations under two headings.  

The first were regulations designed to control every aspect of how industries would be allowed to operate—what forms of energy they could use, the composition of their workforce, the kind of finance they could raise, etc., etc.  The second regulations required companies to spend their own resources in achieving political objectives for which the government was reluctant to levy taxation.  I covered this use of regulations by governments more fully in my earlier piece Towards the Socialist Corporation.

As Welch had foreseen twenty years before, however, when socialists did this, they were taking for granted that companies would be able to factor in the costs of these impositions more or less indefinitely without collapsing or going bankrupt. They had infinite faith in capitalism and a belief that it would always deliver the goods for them. 

And now the bills are coming home to roost.   

In his consistently original, usually correct, and sometimes scary Wall Street advice column, "True Blue Will Never Stain," Martin Hutchinson looks at how the first set of regulations has obstructed the development of three large economic development projects—exactly the kind of project that are necessary if we are to keep our economy moving forward and delivering growth (even at today’s anemic rate of productivity.) 

He points out that the so-called Holy Roman Empire (i.e., broadly speaking, Germany before its unification in 1870) was about eighty years behind the Brits and the U.S. in developing its own industrial revolution because of two flaws: its feudal system of land tenure which was only one step up from serfdom, and its system of internal tariffs which obstructed trade and raised the prices of goods in all its subject principalities. There could be no creation of a large “single market” while these absurd economic institutions survived which they did until 1833, after which Germany began its successful catch-up. 

Charlemagne. King of the Franks and Emperor of the Romans.

Why did they survive so long in the light of the fact that they were holding the statelets of the Holy Roman Empire back in a fast-developing world? Hutchinson argues that they were so stitched into the Empire’s legal system and so into the thinking of its people that reforming them seemed inconceivable. Hutchinson then delivers his blow; that in the U.S. today a similar duo is holding back the American economy. It is the combination of aggressive environmentalists and over-powerful lawyers who between them exploit the opportunities that the government’s over-regulation gives to them to halt economic development and to win large legal settlements.  

Hutchinson gives three recent examples:  

  1. "A recent Supreme Court decision allowed the Atlantic Coast pipeline to run under the Appalachian Trail, a lawsuit that had held up the pipeline for years. However, this decision was essentially nullified when Dominion Energy, one of two companies that had been developing the $8 billion project, gave up and sold its remaining natural gas assets to Warren Buffett. Apparently, even with Supreme Court approval, the remaining environmental harassments and legal delays were sufficient to make the project uneconomic.
  2. "In a second case, the $4 billion Dakota Access oil pipeline, which has been opened with oil passing through it quietly for three years, was suddenly blocked by a Washington district court, and prevented from further operation, because of some alleged defect in the pipeline’s paperwork before it was opened. By this decision of a lower court 1,500 miles from the pipeline, the operation of a $4 billion asset will be prevented for an indefinite period, at least 13 months.
  3. "In the third case the Keystone XL pipeline, a major international project which was held up arbitrarily for the entire eight years of the Obama administration, and had slowly been working its way through the paperwork since 2017, was held up by the Supreme Court for yet another environmental review, thus dooming it if Joe Biden should win the November election. "

As Hutchinson concludes, not only are huge costs added to these projects by such delays but they are almost never completed on time, sometimes the delays become cancellations, and some projects are never started because the obstacles to them deter investment in the first place. 

There are three villains in this account, however, not just Hutchinson's two. They are the close-minded, single-issue environmentalists; the aggressive lawyers—as George Gilder has written, “Entrepreneurial lawyers are the cancer of capitalism” -- and the government that makes and sustains the regulations that enable the first two to play their obstructive roles.

What makes the obstructive role of governments so hard to understand is that they are enabling the failure of their signal policies. Both political parties are loudly committed to large infrastructure spending to revive the U.S. economy. But unless they reform the regulations that allow the other two to flourish, they will be spending billions of taxpayers’ money mainly on legal fees, cost over-runs, and abandoned projects.  

It seems so lunatic that it couldn’t possibly be true. Before you say that, however, consider this disturbing fact: governments around the world have steadfastly refused to publish the cost estimates of their promise to move towards carbon neutrality by 2050. Everybody knows that this policy (if it’s ever implemented) would be enormously expensive as well as reducing the standard of living of their populations. Still, it’s telling that governments are nervous about putting an actual figure on it -- as if the voters are so distracted by word inflation that they won't notice words such as horrendous or terrifying unless they're backed up by a statistic.  

So we can understand the reluctance of governments when we learn that one government has done so with results that would alarm a drunken sailor into fiscal sobriety. As the Danish economist and head of the Copenhagen Consensus, Bjorn Lomborg, points out in a New York Post oped, adapted from his new book, False Alarm: How Climate Change Panic Costs Us Trillions, Hurts the Poor, and Fails to Fix the Planet:

Only New Zealand has asked for an independent assessment of the cost of its climate policy. It will cost 16 percent of its GDP each and every year by 2050, making it more costly than the entire New Zealand public expenditures for education, health, environment, police, defense, social protection, etc. (My italics.) 

Lomborg comments reasonably “We need smarter solutions.” For that, however, we would need smarter governments and smarter politicians. What we have are people who think you can pile ever-larger burdens on capitalism, progressively starve it of real investment and opportunities, and then ask it to save the world.