Tuesday 10 January 2012

Don't Mock Good Capitalism: It's already on the way

The below is a guest blog by Christian James Smith, Corporate Social Responsibility manager at ASOS, the online fashion retailer. Christian is not a member or supporter of the Labour Party and this blog represents his own views and not those of his employer

When the Conservative government mocked Ed Milliband’s idea of “good capitalism” late 2011, claiming that it unworkable, they were inadvertently mocking a number of businesses (Unilever, M+S, Kingfisher) who have adopted this model for future growth. The simple fact is that the neo-liberal system, which has underpinned years of growth, no longer meets the needs of the masses. “Good Capitalism” means being aware of the impacts of your company and striving to limit them – whether they are social or environmental. It means internalising costs that companies have long ignored. Not just because it is the right thing to do but because it can lead to further innovation and can help protect the resources (whether natural or human) needed in order for business to thrive.

The profit at all costs paradigm is over. Growth does have limits and we are seeing the results of reaching some of those limits. If people do not have money to spend, there can be no growth. If there are diminishing resources, there can be no growth. If spending on education, research and development dwindles, there can be no growth.[1] If too much of your economy is based on one sector – a sector deemed too big to fail, there can be no growth.

That does not mean the end of big business. It means that start of something more meaningful; the creation of businesses that connect people to their communities once more - a process already underway and an aspect that continues to elude the Tory Government.

The UK already possesses a high level of creativity and companies admired around the globe for quality and durability. Fashion companies such as Aquascutum, Burberry and Mulberry are desired all over the world. This desire for British inspired design is not just in the luxury sector but also further down the chain with companies such as Superdry, Topshop, Karen Millen, Ted Baker and ASOS flying the flag for the UK fashion industry. However, the UK manufacturing sector barely exists today – it was also not helped by the decision to focus on banking and services – in case you had not realised, not everyone wants to be a banker or work in a mobile phone shop. Competing with the Far East over price would have been foolhardy; competing over quality is a battle that British manufacturing would have won hands down. With a little more support from government, there is no reason why some of this sector cannot flourish once again.

Companies want to employ people at the local level. They want to be part of communities and they want to be part of progress. They want to, and in some cases already do, provide apprentices to graduates or school leavers. Part of the focus in the service sector has lead to a dearth of qualified people to work in these sectors – people with specialised skills essential to the success of certain industries. “Good capitalism” helps them and it helps the image of the UK. It can reinvigorate the UK economy, can attract the best graduates to areas other than banking and finance and can provide the counter point to the staid and unimaginative neoliberal polices of the current government.

In 1784, Kant wrote the paper “What is Enlightenment?” The answer to that was: “...man's emergence from his self-imposed immaturity..” The system does not work and government seems unable to properly address the problems we face with new ways of thinking. Those benefiting the most from the status quo need to open their eyes to the changing times. Ed Miliband is right to vocalise the need for change.

For the cutting edge of the debate about good capitalism and the new economy we need, don't miss Fabian New Year Conference 2012 featuring a keynote speech from Ed Balls

[1] 'Cornucopians' can talk about scientific progress, but that won’t happen if we don’t have excellent education systems and companies with the necessary impetus to be progressive


Stephen_Boyle said...

While I agree with a lot of what's said here, it's important to remember that for publicly traded firms CSR is only legal in so far as it is designed to garner greater profits and maximise investor value in the long-run. There is an in-built legal imperative in the corporate form to maximise shareholder rather than societal value, which is exacerbated by corporate personhood which insulates shareholders from the debts of the company which they own. In other words, if a company can legally manoeuvre to avoid tax, they are legally obliged to do so. While placing employees on renumeration committees and the kind of social engagement the writer talks about are both welcome, we need to also re-examine the legal nexus in which corporations operate and look muhc more towards the creation of societal, rather than simply shareholder value.

Alexandra Sturdza said...

I agree with Christian. Good capitalism generates growth. And our economic model is based on that (and has been since the industrial revolution).
The thing we need to address is to start educating business, government and the wider society on the idea that growth doesn't necessarily mean 'volume'.
Efficiency gains, doing better with less and revenue from recycling is about growth..just not about volume..