The left is upping its campaign against the free market – and the City in particular
John McDonnell and the Labour party have long talked of the need to “democratise” our economy.
Their plans for sweeping nationalisations, a state-run investment bank and the forced reallocation of shares to the workers are all couched in the language of taking power from the fat cats and making finance a servant of the public, yet they never pause to think about the benefits of a system that, while imperfect, underpins millions of pensions and supports private enterprise up and down the country.
The think tank New Financial has attempted to inject some facts into this argument, and their detailed case study of the north west of England reveals that more than 900 companies in region, employing over 600,000, people have raised around £70bn from the markets in the past five years. Over 1,000 of the region's start-ups or fast-growing firms have been backed by venture capital over the same period. It paints a portrait of the UK's dynamic capital markets and raises awkward questions for Labour and its outriders who present the City as a parasitic entity that must be dismantled and reassembled to serve the socialist cause.
A new weapon in the modern left's war on market forces, property rights and capital was unveiled last week when the Common Wealth think-tank launched. It appears to be an effort to add some intellectual firepower to Labour's economic policy-making and its debut piece of work, Owning the future: toward the democratic economy, is a rather turgid but undeniably radical little pamphlet. We're told “a new and democratic financial ecology is a necessary component to the transition to a democratic and sustainable economy.”
Beneath the earnest and academic language a simple proposition exists: public good, private bad. There's no denying this is now the battleground.
Fortunately, Common Wealth doesn't have the field to itself. Free-market think tanks are stepping up to the fight. The Institute of Economic Affairs today publishes a report called Whose company is it anyway? The author, City veteran turned policy wonk Catherine McBride, makes a full-throated defence of activist investors and “unruly shareholders” – reserving particular criticism for the laissez-faire approach of proxy advisors who “may not take the required interest in corporate governance or may simply not wish to disrupt the status quo of existing company management.”
This is proper, red-meat capitalism and is a welcome riposte to the left's constant attacks on the free market and the City in particular. Let battle commence.