Bill Gleeson hears how an economy burdened by unsustainable debt could be revived
BAD capitalism got us into our current mess – can good capitalism get us out of it?That was the question posed at a talk given by economist and former editor of The Observer, Will Hutton, at The University of Liverpool this week.
According to Mr Hutton, currently principal of Oxford University’s Hertford College and chair of the Big Innovation Centre at the Work Foundation, Britain’s economy is in an even worse mess than most people appreciate.
A century of misguided policy has led to an unbalanced economy that has promoted the City of London’s financial services industry at the expense of manufacturing in the north, while successive governments have squandered the nation’s north sea oil revenues.
The favourable regulatory environment afforded to the financial services sector has also resulted in businesses and individuals taking on unsustainable levels of debt that they are now unable to repay.
Mr Hutton was speaking at the last in the University’s current Burning Issues lecture series. He said: “When you think about capitalism for more than a nano second, it’s obvious that capitalism in its purist form is not the way that markets operate in reality.
“We live in the aftermath of epic events that have in the past resulted in enmity between nations and even wars.
“It does require cultural change if you want the march of the makers.
“We are in a profound mess.”
He added the reason capitalism in its purist form doesn’t resemble the way markets work in real life is due to the risk associated with them. These can be too great to be borne by even the biggest companies, not to mention individuals, and therefore at least some of the risks should be shouldered by the wider society.
Mr Hutton explained: “The future is by definition unknowable. You have to socialise part of the risk if you are going to have capitalism. There have to be ways of mitigating risk.”
The rise of bad capitalism led to the growth of the Britain’s banking sector and huge levels of private and public debts that are now five times greater than the country’s GDP.