The Future of Capitalism

by Paul Collier

  Just as narratives of common belonging based on place and purpose can strengthen shared national identity, so narratives of the reciprocal obligations of citizens can strengthen that ethical web. Unsurprisingly, Salman Abedi never absorbed even elementary reciprocal obligations: his neighbour reported that Abedi’s car would often block his driveway. In turn, reciprocal obligations can be reinforced by the purposive narratives of enlightened self-interest. Citizens can come to recognize causal chains showing that behaviour that is not in their immediate self-interest, such as paying taxes, can contribute to outcomes that are in the long-term self-interest of everyone. Abedi did absorb such a narrative: he sacrificed his immediate self-interest for the prospect of paradise. Narratives are powerful; we should be crafting better ones.

  Reduced to a sentence, shared identity becomes the foundation for far-sighted reciprocity. Societies that succeed in building such belief systems work better than those based on either individualism or any of the revivalist ideologies. Individualist societies forfeit the vast potential of public goods. The revivalist ideologies are each based on hatred of some other part of society and are culs-de-sac to conflict. In a healthy society, those who become successful have been reared into acceptance of that web of reciprocal obligations. Being fortunate, these trigger support for those whose lives have turned out to be less fortunate. The successful comply with these obligations because they are rewarded with the self-respect and peer esteem that comes from fulfilling them. More coercive powers are legitimized for use against a recalcitrant minority.

  This is the moral pragmatism that can guide our politics from polarized failure to co-operatively working to address the divisions that beset our societies. We have unmet duties of care to refugees fleeing catastrophe; to those mired in despair in the world’s poorest societies; to men in their fifties whose skills have lost their value; to teenagers about to be trapped in dead-end jobs; to the children of broken families; to young families despairing that they will ever own a home. We must meet them. But we must also restore the vastly more demanding reciprocal obligations that once arose from our shared identities.

  This may send shivers down the spines of those on the right, because of the prospect of redistributive outcomes superficially analogous to those envisaged in Marxist ideology. Similarly, it may send shivers down the spines of those on the left, because it recognizes distinctive obligations within families and nations that offend Rawlsian and Utilitarian norms. Each of these concerns is misplaced.

  What I advocate is not a variant of Marxism. Marxist ideology relies on a hate-filled narrative that replaces shared identity with extreme divisions of class identity. It replaces mutual obligations with the assertion of the rights of one class to expropriate what belongs to the other. Like radical Islam, its version of enlightened self-interest invokes a distant paradise in which the state ‘withers away’. The actual outcome of Marxist ideology, which has been invariably proved, is social conflict, economic collapse and a state that, instead of withering away, imposes overweening and brutal power. It is currently playing out in the flight of refugees from Venezuela, there to see for anyone who bothers to look. The difference between a society that pragmatically steers capitalism on a foundation of rational reciprocity, and one run by Marxist ideologues, is that between one at peace with itself, and one that is lacerated by mounting hatreds.

  As to Rawlsian and Utilitarian dreams, discrediting family obligations in favour of equal obligations to all children, or national obligations in favour of obligations to global ‘victims’, would not build Eden. It would bequeath to the next generation a society sliding into the pit of entitled individualism. In retrospect, the period of Utilitarian and Rawlsian dominance of the centre-left will come to be recognized for what it was: arrogant, over-confident and destructive. The centre-left will recover as it returns to its communitarian roots, and to the task of reconstructing the web of trust-based reciprocal obligations that address the anxieties of working families.* Similarly, the period of domination of the centre-right by assertive individualism will come to be recognized as the seduction of a great tradition by economic man. As it recovers its ethical bearings, it will return to ‘one nation’ politics. The new anxieties are too serious to be abandoned to the far left. Belonging to place is a force too potent, and potentially too constructive, to be abandoned to the far right.

  Faced with the new anxieties, it should be evident that the pertinent economic menace is the new and virulent divergence in geographic and class fortunes. Faced with the rise of extremist religious and ideological identities, it should be evident that the pertinent social menace is the fragmentation into oppositional identities sustained by the echo-chambers of social media. After Brexit and the rise of Donald Trump it should be evident that the pertinent political menace is exclusionary nationalism. By eschewing shared belonging, and the benign patriotism that it can support, liberals have abandoned the only force capable of uniting our societies behind remedies. Inadvertently, recklessly, they have handed it to the charlatan extremes, which are gleefully twisting it to their own warped purposes.

  We can do better: we once did so, and we can do it again.

  Acknowledgements

  The origin of this book was an invitation from Toby Lichtig of the Times Literary Supplement to write a ‘state of society’ essay for the first issue of 2017. The unsettled times had triggered a clutch of books diagnosing various ills and Toby offered me licence to draw on them as I judged fit. Through the Christmas period, books, children and laptop alternated on my knee, resolving into a diagnosis: the book that was needed for the times was The Future of Capitalism but, unfortunately, nobody had written it. The article produced a remarkable reaction, culminating in Andrew Wylie bearing news from New York that three publishers had pre-emptively bid for a book that I had not proposed to write. My British publisher, Penguin, asked me to defer the book for which I was contracted and write this one first.

  Intellectually, the task was daunting, my proposition being that what was needed was a synthesis of moral philosophy, political economy, finance, economic geography, social psychology and social policy. Each of these disciplines has laid minefields around itself, designed to deter and destroy intruders. I have been fortunate that some brilliant academics have been willing to work through drafts of the manuscript commenting on it. Their suggestions have undoubtedly greatly improved the final version, but my gratitude to them does not imply that they share any liability for the result.

  Among philosophers I would particularly thank Tom Simpson, for going through the entire manuscript and explaining subtle issues with exemplary clarity and patience; Chris Hookway, for many hours of discussion on Pragmatism; Jesse Norman, for his masterful knowledge of Adam Smith; and Konrad Ott, for hours of discussion on reciprocity and the Kantian perspective.

  Among economists, Colin Mayer and I discovered with delight that we had written what are effectively companion books, to be published at the same time, his being Prosperity. I have long been in intellectual awe of John Kay, who combines the skills of a polymath with the pragmatism of good judgement. With great kindness, he worked through the entire manuscript in detail and gave me hours of comment and suggestions. Tim Besley, at the forefront of modern analytic economics, yet astonishingly erudite on moral philosophy, not only commented on the manuscript but organized a seminar on it at All Souls, Oxford, persuading Alison Wolf to be the discussant for the proposals on ‘social maternalism’. Tony Venables, whose profound influence on Chapter 7 is evident, also commented in detail on the entire manuscript. Finally, Denis Snower, President of the Kiel Institute for the World Economy, not only commented in detail on the manuscript but has been invaluable in encouraging and contributing to what we have come to regard as ‘behavioural economics, generation 2’: the attempt to bring the insights of social psychology into the economic analysis of group behaviour, as distinct from individual decision biases. Our colleagues in the network Economic Research on Identity, Narratives an
d Norms will in various places recognize my intellectual debt to their work.

  One of the least-appreciated explanations for Oxford’s continuing intellectual pre-eminence is that the college system generates random social interaction across disciplines. In my case this is augmented by the generous anomaly of having rights at two different colleges. It is thanks to a lunch at St Antony’s College that Roger Goodman, professor of the sociology of Japan, began my illumination in the attitudes of elite Japanese women to children. And it is thanks to a lunch at Trinity College that Stephen Fisher, Britain’s foremost academic psephologist, came up with the test of Brexit attitudes presented in Chapter 8. Steve also provided the most exhaustive of all the written academic comments on the manuscript, in a determined and generous bid to save me from myself. The indefatigable Laura Stickney of Penguin performed a complementary and equally vital service in nudging the manuscript into readability.

  Finally, I am indebted to the many people who have contributed the evidence of their own experience: Bill Boynton, Chairman of Keele World Affairs, who has built a brilliant forum for the people of Stoke-on-Trent; Deborah Bullivant, the dynamo behind Grimm and Co; Paul Cornick of Unite; the sociologist Professor Mark Elchardus and the people of the P and V Co-operative Movement in Brussels; Ian Moore, who for many years led a team of cognitive behavioural psychotherapists in Sheffield; Gianni Pittella, President of the European Socialists and Social Democrats, and his advisor Francesco Ronchi; and Alan Thompson, lawyer and Quaker.

  A book that is easy to read is hard to write, and my family have had to live with the process of struggle. As ever, Pauline has combined holding us all together with providing the eagle eye of the honest reader. Brought up to shun prominence, it has been a difficult decision to write such a personal book; but without it, the edge of passion in the writing would have seemed contrived.

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